Trade Forex Trading

MACD Oscillator Technical Analysis Fast Line & SignalLine

MACD is used in various ways to give trading analysis data.

  1. MACD center line crosses show bullish or bearish markets: below the zero is bearish, above zero is bullish.
  2. MACD Cross-overs indicate a buy or sell signal.
  3. Oscillations can be used to indicate over-sold and overbought regions
  4. Used to look for divergence between price & indicator.

Construction of MACD

The MACD is constructed using 2 exponential MAs and this indicator plots two lines. The two default exponential MAs used are 12 and 26. Then a smoothing factor of 9 is also applied when drawing MACD indicator.

Summary of how MACD is drawn

MACD uses 2 EMAs + a smoothing out factor (12, 26 Exponential MAs Moving Averages & 9 smoothing periods)

MACD only plots two lines - the MACD fast line and the MACD signalline

How Do I Trade XAUUSD with MACD Fast Line and MACD Signal-line? - Best MACD Parameters Gold Trading

MACD Lines - MACD Fast Line & MACD SignalLines Signals

  • The Fast-Line is the difference between the 26 EMA & 12 EMA
  • The SignalLine is the 9 period moving average of the MACD fast line.

Implementation of MACD

MACD implements the MACD line as a continuous line while the signal-line is implemented as a histogram. These 2 MACD LINES are then used to generate signals using the crossover trading strategy.

There is also the MACD center line which also is known as zero mark & it's a neutral point between buyers & sellers trading the market.

Values above the center-mark are considered bullish signals while those below are bearish signals.

The MACD being an oscillator technical indicator, oscillates above & below this center-line.

Get More Tutorials & Tutorials:

Forex Market Traders Seminar Gala

Forex Market Traders Seminar

XAUUSD Broker