Moving Average Convergence Divergence (MACD)
Very Useful Technique For Daily Forex Profits
The MACD (Moving Average Convergence Divergence) technical indicator is one of the most popular Technical Analysis tool for Daily Stocks and currency traders. MACD is a trend following technical indicator that shows the relationship between two moving averages of prices. The MACD technical calculation is performed to taking the difference between the first EMA and the slow EMA and this value is indicates on above chart .
MACD techniques has three components.
1. Crossovers::-
When the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum.
2. Divergence:
When the security price diverges from the MACD. It signals the end of the current trend.
3. Dramatic Rise:
When the MACD rises dramatically , that is, the shorter moving average pulls away from the longer-term moving average . it is a signal that the security is overbought and will soon return to normal levels.
Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. The zero line often acts as an area of support and resistance for the indicator.
Source:- Missing Step Blogs
