created a leading investment manager, a successful trader and author of numerous publications Gerald Appel indicator MACD, based on the convergence divergence moving averages (Moving Average Convergence / Divergence) is perhaps the most unique assets included in virtually any forex trading platform.The MACD can be simultaneously attributed to the trend indicators, and oscillators.MACD The uniqueness lies in the fact that he is able to generate trading signals on the trend sections of the market as well as in lateral movement (the flat).In addition, the use of this indicator to determine the potential strength of the movement, as well as (with a certain probability) possible change in market direction.
indicator MACD: description
to plot MACD is used two ways - line, and as a bar graph.
Line MACD is based on three moving averages, of which the graph shows only two.Directly the MACD-indicator - the difference between two exponential moving averages (EMA from a smaller period is deducted EMA with a large period).In order to get rid of random fluctuations, a so-called signal line, is a simple moving average (SMA).And for its construction are not used price value, and the difference between two moving averages, only with a smaller period.Default values are used for the EMA 12 and 26, and for SMA - 9.
setting values can be changed.The increase in the values (for example, 21,50 and 12) prevents the flow of false alarms, however, does not allow to timely determine the start of the market.Decrease the settings (for example, 6, 13 and 5) makes the MACD-indicator is more sensitive to changes in prices, however, it leads to more frequent false alarms.
To make it easier to recognize the change in the distance between the lines, use a bar graph representing the difference between fast (MACD) and slow (signal) line.When the fast line is above the slow histogram bars are at the top of the zero line, and vice versa.
should be noted that the trading platform MT4 (MetaTrader-4), in contrast to the same Rumus, output only the signal line and histogram directly the MACD-indicator is not displayed.
Signals indicator MACD
Crossing the line MACD signal line from top to bottom is a clear sell signal.With this arrangement, the bars of the histogram below the zero line only strengthens the signal.Crossing the line MACD signal line from bottom to top, on the contrary, is a buy signal, but finding a position in the histogram is above the zero line is also a strong signal for opening long positions.
conflict between indicators and the price chart shows divergence ("bear" - if a higher maximum price did not find its confirmation maximum MACD - or "bull" when it is not confirmed by a lower low) and is a sign of a possible change of trend.
Disadvantages indicator MACD
- as linear indicator and the histogram often give false signals, especially on the hourly charts and smaller.Therefore, they are best used in the daily timeframe and beyond.
- When forming a linear trend indicator signals triggered with a significant delay.
- Since the MACD-indicator calculates the difference between two moving averages, this value is an absolute, not relative.Because difficult to compare MACD levels over relatively long periods of time, especially for those tools that have changed exponentially.
- Using MACD, difficult to determine overbought and oversold levels.
Yet MACD-indicator is recognized as one of the most reliable technical indicators on the currency market.The signals it quite easy to understand and can properly assess the current situation and in a timely manner a good deal, even for beginners.
