Monday, October 22, 2007


Moving Average Convergence Divergence (MACD). Common MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA.

Indicators of MACD:
1. Crossovers - when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal.

2. Divergence - When the security price diverges from the MACD. It signals the end of the current trend.

MACD can combined use with Fibonacci retracement. See example below:

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