MACD

The MACD is a very good and much used indicator. MACD means “Moving Average Convergence Divergence”.

The MACD indicator combines some of the oscillator principles with a moving average crossover approach.

It first looks at the difference between two moving averages of price. The MA lines may get closer (converge) or get farther apart (diverge). When the shorter period (faster) MA crosses above the longer period (slower) MA, that indicates an uptrend, and vice versa.

Wikipedia has a good picture with explanation.
Scroll down to the “Basic components” section at http://en.wikipedia.org/wiki/MACD

These pages show and explain different ways to use MACDs:

http://www.forexindicator.org/forex-macd-indicator-explained.html
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve

Note: the standard settings are most often used, but they were developed for daily stock charts. You may find other settings that work better for Forex trading.

The faster MACD line is the difference between the two Moving Averages. The slower (or later) red line is referred to as the signal line and is usually the EMA (Exponential Moving Average) of the MACD line.

The signals to buy or sell occur when the two lines of the MACD cross.

However the MACD values also fluctuate above and below a zero line. This is where the indicator resembles an oscillator. An overbought condition occurs when the lines are too far above the zero line. An oversold condition occurs when the lines are too far below the zero line.

The MACDs below are variations using special moving averages, that may work better for your purposes.


MACD Dema

Standard MACD modified by Patrick Mulloy to use DEMA instead of EMA.
Gives an earlier signal than the standard MACD with the same settings.

Price: $10.00
Add to Cart


MACD Tema

Standard MACD modified by Patrick Mulloy to use TEMA instead of EMA.
Gives an earlier signal than the standard MACD with the same settings.

Price: $10.00
Add to Cart


MACD LSMA

Standard MACD modified to use LSMA (linear regression) instead of EMA.
Gives an earlier signal than the standard MACD with the same settings.

Price: $10.00
Add to Cart

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