Moving Average Convergence/Divergence (MACD) - MACD Technical Analysis in Forex Trading

MACD Trading Strategy PDF - Understanding MACD Indicator - MACD Tutorial PDF

The MACD Indicator was developed by Gerald Appel.

The MACD Indicator is one of the simplest, most reliable, and most commonly used technical indicators available. The MACD is a momentum oscillator with some trend-following characteristics. MACD Technical Analysis in Forex Trading - The most popular forex technical analysis of the MACD indicator first calculates the difference between two moving averages and draws this as the MACD "Fast " line: and A second MACD "Signal " (trigger) line - the signal line is calculated from the resulting MACD "Fast " line and drawn in the same frame as the "Fast " line. The "standard " MACD values for the MACD indicator "Fast " line are a 12-period exponential moving average and a 26-period exponential moving average and a 9-period exponential moving average for the MACD indicator "Signal " line.

MACD Trading Strategy PDF - Understanding MACD Indicator

The MACD indicator is widely used as a trend following indicator and tends to work most effectively when measuring wide-swinging market forex market price movements. There are three basic techniques for using the MACD indicator to generate forex signals.

MACD Forex Trading Crossovers:

1. MACD Fast line and MACD Signal line Crossover: A buy signal occurs when the MACD Fast line crosses above the MACD Signal line and a sell FX trading signal occurs when the MACD Fast line crosses below MACD Signal line.

2. MACD Fast Line / Zero Line Crossover: When the MACD FastLine crosses above zero line a buy signal is given. Alternatively, when the MACD Fast-line crosses below zero line a sell signal is given.

MACD Divergence: MACD Forex Divergence Trading Strategy

Looking for forex divergence between the MACD indicator and forex price can prove to be very effective in identifying potential forex trend reversal signals and/or trend continuation signals when it comes to forex price movement. There are several types of MACD divergence forex trading setups:

MACD Classic Divergence (Regular Divergence)

• MACD Bullish Divergence - Lower lows in forex price & higher lows in MACD indicator
• MACD Bearish Divergence - Higher highs in forex price & lower highs in MACD technical indicator

MACD Hidden Divergence

• MACD Bullish Divergence - Lower lows in MACD and higher lows in forex price
• MACD Bearish Divergence - Higher highs in MACD indicator and lower highs in forex price

MACD Overbought/Oversold Levels: Forex MACD Indicator Technical Analysis

The MACD indicator can be used to identify potential overbought & oversold levels in forex price movements. These overbought & oversold levels are generated by comparing the distance between the shorter moving average and the longer moving average used to calculate the MACD: if the shorter moving average separates dramatically from the longer moving average it might be a signal that forex price is over extending & it will soon return to more realistic levels.

Implementation of MACD settings

The price period, and MA type for each of the moving averages (including the MACD Signal line) have been parameterized to allow a trader full customization of the MACD indicator setting. The MACD Indicator Fast line is drawn as a solid blue line. The MACD Indicator Signal line is plotted as a solid red line. A green Histogram drawn on the MACD indicator represents the difference between the MACD Fast line and the MACD Signal line is also included to make identifying their MACD indicator crossover points easier.

MACD