There are so many trading techniques that using MACD Moving Average Convergence Divergence. Moving average convergence divergence MACD divergence trading signals, MACD cross zero line signals, MACD lines crossover and MACD moving above or below zero line.
Moving average convergence divergence formulated and showed from diference of 2 MA trend indicators. So, no doubt this indicator is also can read the current market trend.
What is the best setting for Moving average convergence / MACD indicator
You can set your own standard setting for this indicator but if you do not have an idea you can use default setting for moving average convergence divergence, the default setting for this oscillator indicator is 12, 26, 9.
If you go in foreign exchange forums in the internet, you will find so many variant trading system that using MACD indicator. And those trading systems some have own setting for MACD, but Gerald appel recommended for MACD setting is 12, 26, 9.
MACD Golden Cross
As I already mentioned before, MACD technical indicator is calculating of 2 Exponential moving average. In the example chart, Moving average convergence divergence line is showed as blue line which moves below and above the zero line. In the simple technique when the two exponential moving average indicator crossover, this known as MACD golden cross, the MACD value is zero when the MACD line crossover the zero line. The length of MACD line would assume strength of the market trend. Crossover both MACD line and signal line, this can be interpreted by trend changes. This crossover usually occur faster than golden cross.
How to use macd indicator in forex trading?
Open sell trading position when MACD moves below zero line and cross below zero line
Open buy trading position when MACD moves above zero line and cross above zero line
MACD is stand for Moving average convergence divergence. This indicator is used to determine average movement on trading chart, and to define convergences - divergences.
1. Convergence is the situation when the chart move bearish but the indicator move bullish. When the convergence occurs we can open buy trading position. Entry level is when the histogram higher than previous bar after convergence.
2. Divergence is the situation when the chart move bullish but the indicator move bearish. When the convergence occurs we can open sell trading position. Entry level is when the histogram bar lower than previous bar after divergence.
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