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Technical Indicator, MACD: Three Parts Explanation

February 2nd, 2010 No comments

Important Take Away – Video 1

=> * MACD Crossover (i.e. the MACD & the 9 days MACD moving average) is faster than the crossover between the 12 and 26 days EMA.

=> * MACD Divergence (about 7 min 30 s).

~Weakening in momentum of Uptrend (opportunity for short): Price at higher high but MACD lower high.

~Weakening in momentum Downtrend (opportunity for long): Price at lower low but MACD higher low.

Important Take Away – Video 2

==> * MACD & Signal Line cross-over, frequent but not reliable.

==> * MACD Centre Line cross-over, lagging but fairly reliable for longer term moves.

==> * Most powerful MACD signal: Divergence with Price (2nd Video, @ 2 m 30 s)


Extensive and detail explanation of MACD from Stockcharts.com

Technical Indicator: The MACD

December 24th, 2009 No comments

Appended below is a ~5 mins explanation of a momemtun indicator, the MACD – pronounced as MAC-D. Enjoy.



Keypoints

*   MACD is a momentum indicator, it depicts positive momentum when it is above the zero line, and negative momentum when it is below the zero line.

*   Essentially, the MACD line is the difference between 2 exponential moving averages: 12 and 26 days

*   MACD line above zero and rising ==> positive / bullish momentum

*   MACD line below zero and falling ==> negative / bearish momentum

*   MACD Histogram depicts the distance the MACD and the signal line.


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