How to Recognize the Indicator in Focus : MACD?

Moving Average Convergence Divergence, developed by Gerald Appel is basedon the convergence and divergence of two moving averages. It is one of themost commonly used indicators and it is also a part of many trader’s strategies. 

MACD is a trend following momentum indicator plotted belowthe pricechart as a centered oscillator. It captures the strength of the momentumand mayshowyou important reversal opportunities. 

As it is a modified version of multiple Moving averages, fast and slow, it islagging in nature and confirms the trend. 

Let’s see how we can utilize MACD for improving the quality of our trading.

MACD Line

MACD with Signal line

MACD: Strength

MACD confirms the trend and helps you make good money. It also helps ustogauge the strength of the trend. 

MACD is also an integral part of many traders’ strategies which means many people will take the trade along with you. This is usually a good thing as even a weak signal will get stronger as the volume in the direction of your trade will increase. 

Be Careful:

Despite being an amazing momentum indicator, MACD may give false positives.

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Disclaimer: 

The information published in the article is for educational purposes only.