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Moving Average Convergence / Divergence (MACD)

RSI as a Trend ToolMost people use the RSI as a momentum indicator, trying to find Overbought/Oversold (OBOS) conditions, and/or divergences. However there is also a way to use it as a Trend Tool. There is a mathematical relationship that connects the RSI and EMA's. The formula is RSI(x) cross-over 50-line = Close cross-over EMA(2x) i.e. RSI(14) cross-over 50 line = Close cross-over EMA(28) This one of the properties of the RSI, which I discovered when taking a more indept look into momentum indicators, which ultimately led to the discovery of the MACD-v in 2014/2015 The MACD-v was then publicly disclosed in 2022, in the form of a a paper called "MACD-v: Volatility Normalised Momentum", which was awarded: It has won 2 International Awards: 1. The “Founders Award” (2022), for advances in Active Investment Management from the National Association of Active Investment Managars (NAAIM) 2. The “Charles H. Dow Award” (2022) for outstanding research in Technical Analysis, from the Chartered Market Technicians Association (CMTA)
CME_MINI:ES1!Education
by AlexSpiroglou
Bull Bear Power Void - Your volume oscillator is lying to you.The simplicity of this indicator is REALLY what has me gassed up. It's the smallest indicator I have coded but it is just so powerful. There are a million oscillators out there based on volume. My biggest problem with them is that they simply tell you whether you have volume to the upside or volume to the down side. It kind of tricks you with the lack of information into thinking you have a change in your trend or that you're going to be able to break out of a range across a moving average or through some trend line or support and resistance. However many of these Oscillators are failing because they lack to tell you one key thing. They tell you that you have volume but they never tell you if it's enough volume. Even a popular indicator like the MACD can have its MACD Line crossing upwards over the signal, telling you that you have an uptrend but again it's still failing to give you the results of how much volume of trades you have and "is it enough" volume in that crossover. It boils down to the one key fact that without volume there is no momentum. This should be able to make trading crossovers a lot easier. So in today's video I'm going to show you the newest addition to the trading View Community Scripts and it is called, "The Bull Bear Void Volume Oscillator" Use this link to get it for free From my own testing, this oscillator can predict whether the next candle will get you the move you need or not. In the markets you cannot have anything good without volume. After you have volume you have momentum. You cannot have momentum without volume and this is the key thing that causes people to fail when they look for breakouts, trend reversals, or if they're wondering whether this move is a fake out. This indicator is based on the study of volume spread analysis or VSA. This indicator is designed to be paired perfectly with the Heiken Ashi Algo oscillator. Get it here This indicator is strictly to be used as a confirmation indicator and not to be used by itself to tell you when to buy or sell. What are its Parts? The Colored Columns or Volume Bars RED Column - Indicates volume movie downward Light Red - indicates volume is pulling back from a downward move Green - indicates volume is moving upwards Light Green - indicates volume is moving down from an outboard move The void Is Green for bullish and red for bearish. This is a Cloud that appears extending from the center upwards and downwards. This is the average range of volume. Anything volume closing inside of this void is ranging volume or very little volume and it is not enough to break the trend or break out. The MACD and MACD Signal Line Just like using the macd these two lines indicate whether the trend is moving up or the trend is moving down. But in this oscillator it's been colorized to show you when profits are being taken versus new positions being opened in either direction. Rules for a SELL CONFIRMATION TRADE The macd line must be underneath the signal line and the macd line must be below the midline. A bullish column must appear below the midline and it must extend outside of the red void. if you are using the heikin-ashi Aldo oscillator you must also have a red Heiken Ashi candle close below -10. The MACD trend line must be a solid color and NOT black. To open a LONG position you simply reverse the rules.
Education
by CoffeeshopCrypto
21
Trade MACD Multi Time FrameMaking a trade plane using MACD Multi Time Frame. Chart & Indicator : 1. Heikin Aishi Candle 2. Current Chart MACD 3. Higher TF MACD 4. ADX Steps : 1. Look at Higher TF MACD Direction 2. Check if lower TF MACD is aligned 3. Check if ADX / trend's strength 4. Set a limit position, wait for the price to break support. 5. Set SL in previous high. Set TP accordingly: using Fibonacci or previous zone as a target. This is only for educational purposes. Do your own research accordingly.
Education
by Phoenix-Rise-Trade
Moving Average Convergence Divergence Indicator Visual EducationHello Traders, Today I wanted to go over one of my favorite as well as one of the most widely used tools in trading, the Moving Average Convergence Divergence (MACD) indicator. This moving average indicator was created invented in 1979 by Gerald Appel responsible for the MACD line and Signal line and later added to this was the histogram, developed by Thomas Aspray in 1986. Now that you know who created the MACD indicator lets discuss the components of the indicator. The MACD indicator consists of 4 main components, the Signal line , the MACD line , the histogram and the zero line of the histogram often referred to as the baseline. Below are the calculations of the different components to help you better understand what makes up this indicator. MACD Indicator Components and Calculations (White Labelling) Signal Line Red colored smooth line The signal line is simply an exponential (weighted) moving average (EMA) based on the prior 26 days closing price. As with any EMA the formula looks like this: EMA = Closing price x 26 + EMA (previous day) x (1-26) MACD Line Blue colored rigid line The MACD line, similarly to the Signal Line is also an EMA based on the prior 12 day closing price. Also, similarly to the signal line it uses a similar equation to display the line which is: EMA = Closing price x 12 + EMA (previous day) x (1-12) Histogram Green and Red vertical bars charted around a horizontal axis known as the baseline. The histogram is determined by subtracting the signal line from the MACD line. This is easier to interpret than looking at the two lines alone, since it is sometimes difficult to tell if one curve is steeper than the other. The histogram is positive when MACD is higher than its nine-day EMA, and negative when it is lower. This oscillator is definitely a nice touch to the indicator as a whole and my personal favorite indication for divergence which I will teach you more about in part 2 of this series. Histogram Zero line Aka "Baseline" This is the line in the center of the histogram oscillator that is also referred to as the baseline. This line is important as you will see later when I explain the signals this indicator creates. This line is calculated by the MACD Line and the Signal line crossing. Which is another way for you to see that the lines are crossing both bullish and bearish crosses. The calculations behind each part of the indicator is not really information that you need to remember as @TradingView has put a nice suite of house tools for you to use that calculate this for you but, I find that the more you know the better you are able to understand these charts and who knows, maybe someday this will help you crate your own indicator using the pine script editor they also make available to us for free. Also, if you understand the math it helps you when editing the settings to adjust indicators better per the asset you are trading. MACD Indicator Signals (Yellow and Teal Labelling) Now lets go over the signals that this indicator produces help with the way you can utilize this indicator to help you trade. A key note to remember is that the MACD indicator is a Moving average indicator and is best used in a trending market. You can identify a trending market by looking for price action that is heading in one solid direction up or down. Tending markets are usually noted by “higher highs” and “higher lows” in an uptrend and “lower highs” and “lower lows” in a downtrend . This indicator is best used to help you determine trend reversals. There are also 3 major signal components to this indicator but, in this first series we are only going to discuss 2 as it is important to understand this indicator before moving onto the next step and applying the more advanced features. These 3 major components are MACD line crossing over the Signal line and both signal line and MACD lines crossing over the zero line on the histogram . MACD Cross (Yellow) The top MACD line (red rigid line) crossing down over the Signal line (Blue smooth line) is a bearish signal and generally indicates a sell signal letting you know that the price action has potentially came to the end of an uptrend. Again, this is used mainly in trending markets and can be very helpful to assisting in taking profit in a long position or starting a new short position. In contrast to the bearish MACD cross , you can also see on the bottom of the chart that there is an indication of a bullish cross of the MACD line (Red rigid line) over the Signal line (Blue smooth line). This would be a good indication the the downtrend has ended and it may be a good time to start a long position or close a short position. The Histogram Zero line cross (Teal) There are 2 signals you can get from this but the one that matters in my opinion the most is the signal line. So for the sake of explanation I have shown them both together as both bearish and bullish signals on the chart. Now that you know about the signal line and the MACD line it should be easy to identify when these two lines are crossing the zero line of the histogram that we have also discussed. As shown in the chart you can see that the bullish cross is showing the two lines coming from below the Zero Line and crossing above which would be a bullish signal and you would be looking for a buy, potential start of or continuation of an uptrend. On the contrary, if these lines crossed from above the Zero line below then this would be a bearish sell signal and you would be looking to open a short position, be looking for a reversal of an uptrend or continuation of a downtrend. Now here are some key takeaways and tips you will want to always follow when using this or any other indicator. #1: Make sure you know the type of market you are trading by analyzing the market structure. Is it trending and creating higher highs and higher lows, lower highs and lower lows? Or is it ranging in almost a rectangular box? #2: KNOW YOUR INDICATOR and the best market it is used in, again, the MACD Indicator is best used in a trending market! #3: This is probably the most important of the 3, It is a must that you learn everything about each indicator you are using and to never use ONE indicator/Oscillator for signals stand alone by itself. Trading just like anything else in life is a numbers game and the better statistics you have, the better outcome you will receive. Congratulations Traders! You now know the basics of the MACD Indicator!!! I hope you will come back for part two and three of this series that I will be releasing after the new year to help some of the new traders entering this ever expanding community here on TradingVeiw! Part 2: MACD and RSI Divergences Visual Education Release 01/01/2022 Part 3: Falling wedges and Fibs Release 01/02/2022 I hope you had a green year and look forward to learning and trading with all of you winners next year! Happy New Years, Savvy
Education
by Savvythe1
RSI:MACD advanced indicatorgreetings, hope you're doing well and thanks for your likes and comments . Today i'm gonna teach you how to mix two indicators there's lots of indicators that you can mix together and use them, at this tutorial i'm gonna try adding MACD and RSI . 1_ Once you have added the RSI indicator, you have to open RSI settings. 2_then you have to process the way below : go to settings > go to inputs (its a tab like button above) > open source, select MACD:MACD . congrats you have mixed these two indicators, but it haven't finished. 3_ after these steps you have to go to style tab > set the upper band on number 66.66 4_ you have to turn of the check of middle band (there's no need to use it;) 5_ then, set the lower band on number 33.33; well done ! "Guys there is no any %100 true analysis" . you should buy if the RSI line goes upper than lower band, you can expect growing up the price you should sell id the RSI line goes lower than upper band, you can expect getting down the price, thanks for your likes, and comments <3 If there was any questions, i will be so glad to reply to your messages !
Education
by Trader_mehrab82
The MACD explained ! All you need to know about it Hello everyone, as we all know the market action discounts everything :) _________________________________Make sure to Like and Follow if you like the idea_________________________________ In this video, I am gonna explain what is the MACD and how to use it and how to identify buy and sell signals using this indicator. So what is the MACD, The MACD is a trend-following momentum indicator (so a momentum indicator is a technical analysis tool that allows us to determine the strength or weakness of a stock's price movement ) There are a lot of people that use the MACD when they analyze charts because it's very simple and it's very good but I always say never just use 1 indicator to analyze a chart, always try to use at least 3 this way u can make sure that the result is more accurate and the market most likely to move as u analyzed. let's look at the theory behind the MACD before looking at a real-life example and how to identify buy and sell signals using this indicator : The typical settings for the MACD are 12 26 and 9. The MACD consist of 4 parts : 1) Zero line 2) MACD line 3) Signal line 4) Histogram We start off with our zero line and this is where the MACD line and the signal line move around and basically so if the MACD is trading above the 0 line then it's bullish and if it's under then it's bearish. Then we have the MACD line and it comes from the 12 26 section, and it gets calculated by subtracting the 26 EMA of the price out of the 12 day EMA of the price. And after that we have a second line that gets plotted from the 9 section so basically, it’s a moving average for the MACD line so it tries to smooth the MACD line and give us some signals and it's called the signal line.(it's called a signal line because that's where we get our buy and sell signals from) So on top of that, we have another part in this indicator which is called the histogram. So this histogram job is to show how close these lines will crossover, so when the distance between the MACD line and the signal line is far the histogram gets bigger and bigger. So how do we use this indicator : 1) Crossovers between the MACD line and the Signal line. * When the MACD line crosses above the Signal line then its a buy signal (Bullish Crossover) * When the MACD line crosses below the Signal line then its a sell signal (Bearish Crossover) 2) The Histogram . A lot of people use histograms as a way to predict when a reversal will occur. We know that the MACD is a momentum indicator so it can show us when sell pressure is low. And that means it might be a good time to buy. And It can tell you when your long position is about to run out of steam and when you should exit. 3) Divergences between the MACD and the Market Price . A Divergence means that the indicator is not moving in sync with the Market Price and a Reversal could happen (Note that Reversal trading is risky so please calculate your risks before using this Strategy) always remember that : Bullish divergence is when the Market price is going down but the MACD is going up. Bearish divergence is when the Market Price is going up but the MACD is going down. I hope I’ve made the MACD easy for you to understand and please ask if you have any questions . Hit that like if you found this helpful and check out my other video about the Moving Average, Stochastic oscillator, The Dow Jones Theory, How To Trade Breakouts and The RSI. links will be bellow
COINBASE:BTCUSDEducation
by GabiDahduh
18
How to use RSI and MACD In trading?Hi every one *Definition of RSI: This indicator Is momentum base indicator. The biggest difference with momentum is that there are two line which indicate that: Is the price in the oversold or overbought area or not? We can easily compare the tops and bottoms of every instrument that we like! There is not much difference between RSI and Stochastic oscillator only that there is one line in RSI! Remember every Indicators shows the future of the market! **Full explanation of MACD: Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD called the "signal line," is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. you may buy the security when the MACD crosses above its signal line and sell—or short—the security when the MACD crosses below the signal line. Moving average convergence divergence (MACD) indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls. Moving average convergence divergence (MACD) is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. MACD triggers technical signals when it crosses above (to buy) or below (to sell) its signal line. The speed of crossovers is also taken as a signal of a market is overbought or oversold. MACD helps investors understand whether the bullish or bearish movement in the price is strengthening or weakening. The MACD has a positive value (shown as the blue line) whenever the 12-period EMA (indicated by the red line) is above the 26-period EMA (the blue line) and a negative value when the 12-period EMA is below the 26-period EMA. The more distant the MACD is above or below its baseline indicates that the distance between the two EMAs is growing. The MACD has a positive value (shown as the blue line) whenever the 12-period EMA (indicated by the red line) is above the 26-period EMA (the blue line ) and a negative value when the 12-period EMA is below the 26-period EMA. The more distant the MACD is above or below its baseline indicates that the distance between the two EMAs is growing. MACD is often displayed with a histogram which graphs the distance between the MACD and its signal line. If the MACD is above the signal line, the histogram will be above the MACD’s baseline. If the MACD is below its signal line, the histogram will be below the MACD’s baseline. Traders use the MACD’s histogram to identify when bullish or bearish momentum is high. ***RSI VS MACD: The relative strength indicator (RSI) aims to signal whether a market is considered to be overbought or oversold in relation to recent price levels. The RSI is an oscillator that calculates average price gains and losses over a given period of time. The default time period is 14 periods with values bounded from 0 to 100. MACD measures the relationship between two EMAs, while the RSI measures price change in relation to recent price highs and lows. These two indicators are often used together to provide analysts a more complete technical picture of a market. These indicators both measure momentum in a market, but, because they measure different factors, they sometimes give contrary indications. For example, the RSI may show a reading above 70 for a sustained period of time, indicating a market is overextended to the buy side in relation to recent prices, while the MACD indicates the market is still increasing in buying momentum. Either indicator may signal an upcoming trend change by showing divergence from price (price continues higher while the indicator turns lower, or the other way around. The DEFINITION of Divergences! We hope that you've learn something with this post . Have a nice day and Good luck.
COINBASE:BTCUSDEducation
by CobraVanguard
10
Using the Moving Average Convergence Divergence (MACD)MACD – What it is The Moving Average Convergence Divergence (MACD) is the momentum indicator that shows the relationship between two different moving averages: 1. The 12 period exponential moving average – On Tradingview it is the Fast Length. 2. The 26 periods exponential moving average –On Tradingview it is the Slow Length. The MACD line is calculated by subtracting the 26 period EMA from the 12 period EMA. The Signal line is the 9 period exponential moving average. These two lines are then plotted on top of each other. These are the two lines you see when you turn on the MACD indicator. Additionally, there is a histogram that shows the distance between the two lines. Larger bars tell us that the MACD and Signal are further apart. When it comes to candles, size matters. The larger the candle the more momentum the trend has. The histogram will turn green when the MACD line is above 0 (bullish) and it will turn red when the MACD line is below 0 (bearish). Very bearish momentum is shown above. Photo was taken May 23, 2021. How to use the MACD The most important thing to know about the MACD is how to read the relationship between the two lines. I’ve found that the best timeframe to use the MACD with is daily. This is because the MACD is a lagging indicator and using daily data prevents a lot (not all) of false buy and sell signals. These signals are: • When the MACD line crosses above the signal line it is a buy signal • When the MACD line crosses below the signal line it is a sell signal Additionally, it is best to use the MACD in a trending market; a market with a clearly defined up or down trend. Using the MACD with trend lines is a very powerful combination. The reason for this is that if the market is moving sideways, you can see small fluctuations where the MACD and Signal Line cross but the price does not really go anywhere. These are false breakouts. Therefore, these signals are not automatic buys and sells. There are ways of confirming the indications from the MACD chart. One way is a strategy that uses the RSI and MACD together (which is beyond the scope of this text, but I will discuss in my next article). Another way is to use the MACD with the current trend. So, if you are in an uptrend and then you see a bullish cross, then this is confirmation that you are likely to go higher. The same is true in reverse. Also, please note that the cross over happens well after the price either stabilizes or rises. Again, this is because the MACD is a lagging indicator. Leading Indicator? Since the MACD and Signal lines are lagging indicators is there something that can be used in a predictive way? Some traders use the histogram as a way to predict when a reversal will occur. Since the MACD is a momentum indicator it can show us when sell pressure is alleviating. Meaning it might be a good time to buy. This doesn’t always work of course, but with good risk management (stop losses) you can often get into a position well before its breakout. Conversely, it can show you when your long position is running out of steam and can warn you when to get out. MACD Divergence Another useful way to use the MACD is to spot divergences. A bullish divergence, very similar to the RSI, is when the short-term price trend is going down but, the MACD is going up. Bearish divergence, also very similar to the RSI, is when the price trend is going up but, the MACD is going down. Trading this way is sometimes not a good idea because you are trading against the trend. Please practice good risk management if you are trading reversals. Also, notice the buy signal right before the sell signal that is circled. I really want to hammer home the point that the signals are not automatic buys and sells. Price action is a great way to confirm the reversal (to the up or down side) of a trend. Because simply spotting a divergence does not guarantee the price will follow. Final thoughts As you can see there are different ways of successfully using the MACD. I hope I’ve made a few of these ways clear in this beginner guide. Please let me know if you have any questions and if you like it, please hit the thumbs up and be sure to follow for more. Links to my Fibonacci Retracement and RSI guides are below. Thanks for reading!
Editors' picks
Education
by zsamochin
126
Special Analysis for Bitcoin: Is Bitcoin prepare for bull run?Hello guys, in this technical analysis I want to talk you about why Bitcoin is so prepare for bull run soon? Now, I selected the Weekly and Daily timeframe. Now, in weekly we see a Bitcoin bearish for MACD and price action, but there are a lot doubts that respald that a drop what a much traders hope, it's can be fake drop and the price is can to prepare to go to break up the simetric triangle from 2017. But for this information we need to see in Daily timeframe, that is the key what Bitcoin do. But in Daily timeframe, we see a reality so different than Weekly, because Bitcoin is now into this bullish rising wedge in formation and find up the Elliot Wave D, to later go to drop for the E to find down, and later we proyect for Bitcoin so bullish scenario reaching at $11,500 USD. That is a possible target to see in few weeks. Also the MACD is show us a possible buy!!! Now, if I asking you about if this scenario it's could be to pass. Are you prepare for there? Now, in that case that this rising wedge fail and broke down, we can see a Bitcoin so bearish until the $7,000 USD again. But, the key is in Daily timeframe how we see the trend key, structure and condition for midterm.
COINBASE:BTCUSDEducation
by harisonhbn9718
1ST - MACD TREND FOLLOWING STRATEGYQUESTION - WHAT ARE THE BEST FOREX TRADING STRATEGIES? 1ST - MACD TREND FOLLOWING STRATEGY Step #1: Wait for the MACD lines to develop a higher high followed by a lower high swing point. This is an unorthodox approach to technical analysis. But, we at Trading Strategy Guides.com are different. We don’t mind doing uncomfortable things if that’s what it takes to succeed in this business. First, let’s visualize how an authentic swing point really looks on the MACD indicator: The first rule of thumb to recognize a swing high on the MACD indicator is to look at the price chart if the respective currency pair is doing a swing high the same as the MACD indicator does. A higher high is the highest swing price point on a chart and must be higher than all previous swing high points. While a lower high happens when the swing point is lower than the previous swing high point. Step #2: Connect the MACD line swing points that you have identified in Step #1 with a trendline. At this point, we really ignored the MACD histogram because much of the information contained by the histogram is already showing up by the moving averages. Look at the price action now and compare it to our MACD trendline we drew early. We can clearly notice that the MACD contains the price action much better and reflects the trend much clear. But, at this point, we’re still not done with the MACD indicator, which brings us to the critical part of our MACD Trend Following Strategy. Step #3: Wait for the MACD line to break above the trendline. (Entry at the market price as soon as the MACD line breaks above). When the MACD line (the blue line) crosses the signal line (the orange line) it’s an early signal that a bullish trend might start. However, if trading would be that easy we would all be millionaires, right? And that’s the reason why our MACD Trend Following Strategy is so unique. We’re not only waiting for the MACD moving averages to cross over but we also have our other criteria for the price action to break aka the trend line we drew early. This is a clever way to filter out the false MACD signals, but you have to be equipped with the right mindset and have patience until all the piece of the puzzle come together. If you were to trade just based on the MACD crossover over time you’ll lose money because that’s not a reliable strategy. But if you use the MACD indicator along with other criteria such what this strategy tells you to do, you will find great trade entries on a consistent basis. Step #4: Use Protective Stop Loss Order. (Place the SL below the most recent swing low). Now, that you already know how to enter a trade at this point you have to learn how to manage risk and where to place the SL. After all, a trader is basically a risk manager. You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5-10 pips away from the low, to protect yourself from possible false breakouts. Did you notice? The MACD Trend Following Strategy triggered the buy signal right at the start of a new trend and what is most important the timing is more than perfection. We bought EUR/USD the same day the bullish divergence trend started. Now, what this has to do with the SL? Basically, a good entry price means a smaller stop loss and ultimately it means you’ll lose a lot less comparing it with the profit potential, so a positive risk to reward ratio. Step #5: Take Profit when the MACD crossover happens in the opposite direction of our entry. Knowing when to take profit is as important as knowing when to enter a trade. However, we want to make sure we don’t use the same trading technique as for our entry order. When the MACD line (the blue line) produces signal line crossovers (the orange line) we want to close the position and take full profits. Before taking profits, it’s important to wait for the candle close – either the 4h or the daily candle – depending on the time frame you trade so you make sure the MACD crossover actually happens. Note** The above was an example of a buy trade using the MACD Trend Following Strategy. Use the exact same rules – but in reverse – for a sell trade. Conclusion: The MACD Trend Following Strategy is a very simple trend following strategy and yet a very profitable strategy at the same time. As the saying goes, “The trend is your friend” and no matter if you’re just starting as a Forex trader or you’re already an established trader life is much easier when trading in the direction of the line of least resistance rather than fighting the trend which is a loser’s game. The success behind the MACD Trend Following Strategy is derived from one simple principle: momentum precedes price.
Education
by Tradingstrategyguides
3
BTCUSD 4H MACD TREND FOLLOWING STRATEGY(Rules for A Buy Trade) Step #1: Wait for the MACD lines to develop a higher high followed by a lower high swing point. The first rule of thumb to recognize a swing high on the MACD indicator is to look at the price chart if the respective currency pair is doing a swing high the same as the MACD indicator does. A higher high is the highest swing price point on a chart and must be higher than all previous swing high points. While a lower high happens when the swing point is lower than the previous swing high point. Step #2: Connect the MACD line swing points that you have identified in Step #1 with a trendline. At this point, we really ignored the MACD histogram because much of the information contained by the histogram is already showing up by the moving averages. Look at the price action now and compare it to our MACD trendline we drew early. We can clearly notice that the MACD contains the price action much better and reflects the trend much clear. But, at this point, we’re still not done with the MACD indicator, which brings us to the critical part of our MACD Trend Following Strategy. Step #3: Wait for the MACD line to break above the trendline. (Entry at the market price as soon as the MACD line breaks above). When the MACD line (the blue line) crosses the signal line (the orange line) it’s an early signal that a bullish trend might start. However, if trading would be that easy we would all be millionaires, right? And that’s the reason why our MACD Trend Following Strategy is so unique. We’re not only waiting for the MACD moving averages to cross over but we also have our other criteria for the price action to break aka the trend line we drew early. This is a clever way to filter out the false MACD signals, but you have to be equipped with the right mindset and have patience until all the piece of the puzzle come together. If you were to trade just based on the MACD crossover over time you’ll lose money because that’s not a reliable strategy. But if you use the MACD indicator along with other criteria such what this strategy tells you to do, you will find great trade entries on a consistent basis. Step #4: Use Protective Stop Loss Order. (Place the SL below the most recent swing low). Now, that you already know how to enter a trade at this point you have to learn how to manage risk and where to place the SL. After all, a trader is basically a risk manager. You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5-10 pips away from the low, to protect yourself from possible false breakouts. Basically, a good entry price means a smaller stop loss and ultimately it means you’ll lose a lot less comparing it with the profit potential, so a positive risk to reward ratio. Step #5: Take Profit when the MACD crossover happens in the opposite direction of our entry. Knowing when to take profit is as important as knowing when to enter a trade. However, we want to make sure we don’t use the same trading technique as for our entry order. When the MACD line (the blue line) produces signal line crossovers (the orange line) we want to close the position and take full profits. Before taking profits, it’s important to wait for the candle close – either the 4h or the daily candle – depending on the time frame you trade so you make sure the MACD crossover actually happens. Note** The above was an example of a buy trade using the MACD Trend Following Strategy. Use the exact same rules – but in reverse – for a sell trade.
COINBASE:BTCUSDEducation
by Tradingstrategyguides
2
Bitcoin facing the abyss - need a daily close above....OMGNOT ADVICE DYOR. Caveat - small sample size. Here's the construction. You need BB %B indicator. Then do MACD on that indicator. Mark all instances signal line turns positive (yellow). Mark (white) first instance histogram turns red. If both these cross month end then mark that month end (blue). Box both months in white. Bulls need to push daily close above $7933.4. Come on! If not will first lines of defence hold. NOT ADVICE. DYOR.
BITFINEX:BTCUSDEducation
by Felix000
Education post 12/100 – How to trade hidden divergence?We covered regular divergences in the previous lesson, now let’s discuss what hidden divergences are. Divergences not only signal a potential trend reversal; they can also be used as a possible sign for a trend continuation (price continues to move in its current direction). Always remember, the trend is your friend, so whenever you can get a signal that the trend will continue, then good for you! Hidden bullish divergence happens when price is making a higher low (HL), but the oscillator is showing a lower low (LL). Hidden Bullish Divergence This can be seen when the pair is in a UPTREND. Once price makes a higher low (HL), look and see if the oscillator does the same. If it doesn’t and makes a lower low (LL), then we’ve got some hidden divergence in our hands. Hidden Bearish Divergence Lastly, we’ve got hidden bearish divergence. This occurs when price makes a lower high (LH), but the oscillator is making a higher high (HH). By now you’ve probably guessed that this occurs in a DOWNTREND. When you see hidden bearish divergence, chances are that the pair will continue to shoot lower and continue the downtrend. Let’s recap what you’ve learned so far about hidden divergence. If you’re a trend follower, then you should dedicate some time to spot some hidden divergence. If you do happen to spot it, it can help you jump in the trend early. Sounds good, yes? Keep in mind that regular divergences are possible signals for trend reversals while hidden divergences signal trend continuation. Regular divergences = signal possible trend reversal Hidden divergences = signal possible trend continuation
Education
by GroundStoneHoldings
2
Lesson 2: MACD Indicator - The heart of technical analysisHello Friends, Welcome to the Lesson 2. I hope y'all had been waiting for this one. Hopefully you all understood the first lesson on RSI really well, because this indicator when used with RSI, can do wonders in your trading style. Lets get straight to the lesson without wasting any time. Today we will study MACD (Moving Average Convergence Divergence) indicator. This is one of the most used indicators in technical analysis. This indicator fluctuates above and below the zero line. It highlights both the momentum and the trend direction of a coin. It may sound complicated, but it is fairly simple to use. In this lesson we will talk about how to use the indicator effectively, and what are some of the limitations it has. MACD Setup: As you can see in the chart, we have the MACD line in blue, and the signal line in orange. I prefer using the default setting for the MACD indicator as follows: MACD Line: 12-26 day EMA (Exponential Moving Average) Signal Line: 9 day EMA of MACD line How do we trade with MACD? So basically there are three types of signals within MACD: 1. Zero-Line crossovers 2. Signal Line crossovers 3. Divergence Lets go over each one of them in detail, and I will stay as clear as possible in explaining it to you. 1. Zero- Line Crossovers: Note: The Zero line is the dashed line I have drawn right in the middle of the MACD indicator on the chart. In simple terms, When the MACD line moves across the zero line, it basically means that the 12 day EMA (Exponential Moving Average) is crossing the 26 day EMA. When MACD crosses the zero line from below, it might be the beginning of a new bullish trend. Similarly, when the MACD crosses the zero line from above to below, a new downtrend might be starting up. In the chart example, we can see that there is a bullish trend going on right now, but there aren't too many zero line crossovers on MACD. I have marked some crossovers in yellow circles. You can clearly see that when the MACD crosses the Zero line from below to above, we see a price rise along with the MACD line rise until the MACD turns down towards the zero line. Similarly, when the MACD crosses the Zero line from above to below, we see a dip in the price. The strategy is simple. When we are looking to buy using MACD, we buy when the MACD line crosses the zero line from below. And then see it in profit whenever you are comfortable. When you have been holding a coin for a long time, and you see the MACD line crossing the zero line from above, that usually is a sell signal. It is a good time to sell if you are in profit. Basically you hold long trades until MACD crosses below the zero line. This method is profitable when strong trends emerge. Isn't this part simple? Good. Read it again so that you get one part of the MACD indicator really well before moving on to the next two signals. See the chart carefully. Keep in mind, this is not the only signal you use when you are trading. Now lets move onto the Signal line Crossover method. Read this carefully. Very important. 2. Signal Line Crossover: For this method we are going to look at the small arrows I have drawn on the charts showing the up and down movements both in the MACD indicators and the price chart. This method is preferred by most traders in crypto. It provides you more accurate timing compared to the previous method. It is very simple. We get a buy signal when MACD line (Blue) crosses the signal line (Orange) from below to above. Basically in the bullish direction. Similarly, we get a sell signal when MACD line (Blue) crosses below the signal line (Orange). From this method, we will get an early signal compared to the previous method we discussed. This will give us better and accurate results. Continue reading below.....
Education
by MoneyChartz
25