7. Moving Average Convergence Divergence

You will find out why the MACD is said to be taking the same formulation with MA. Let's look at the origin of the lines above (the MACD line, the trigger line, Histogram, and centerline):
MACD line. By default the MACD line is fromulasi: XMA12 – XMA26 i.e. the difference of XMA period 12 with XMA period 26. Therefore use the XMA, then the properties of the MACD will also resemble XMA properties providing early signals than any other MA

. The trigger line. The trigger line is the actual trigger line by default is XMA9

. Centerline. The usual line. Is the zero line that is limiting the negative with the histogram the histogram

positive. The histogram. Formulations for the histogram MACD line is: – the trigger line used as overbought/oversold indications. I would make clear later.

The other question is can we use another period for XMA MACD line and trigger line? Can. Of course it can. And if you've been pretty proficient you can explore with the use of a different period.

Probably crossed dipikiran us why should we bother using the MACD but only a reduction of XMA only. Not so in reality. Through a simple formulation such as MACD proved to be able to provide information not only trend will happen but it is more than that.

The MACD can be used to find out the transition momentum which is rated strong or weak, can also be used for overbought/oversold condition to find out on the market that could trigger turn of the
trend. MACD for Trend Changes

This is the typical uses of MA used as MACD MACD line and trigger line. How to read inbetween trend from Bullish towards the Bearish and contrary to the way we read the same passage trend on MA. The line used to read them is the MACd line and the trigger line.



Just like rules on the reading MA, on the rules applicable when the MACD MACD line cut the trigger line from bottom then it will change the trend towards the Bullish trend. And the reverse also applies when the MACD line cut the trigger line from the top, it will change the trend towards a Bearish trend
. Then what is his influence with the center line? Is there any influence of the MACD line and the intersection of the trigger line on change trend? Are there! The MACD line and the trigger line which cuts the centerline is also an indication of a change of trend. But in this case it is the change in trend in the long run.

Overbought and Oversold on MACD 

 



Of simple formulation on the MACD, we are not only able to determine the trend in the long term as well as short. There is one more indicator MACD i.e uses as overbought and oversold. Although rarely used, it's good we know it too. Just maybe you liked this indicator as overbought and oversold areas determining.

Overbought situation or saturated buy an indication that the market has been experiencing a saturation in the buying of the currency concerned. If this occurs then the foreseen price reductions will occur in a few moments later. So is oversold, meaning roughly the saturated selling. If an oversold then predicted would happen the strengthening of prices towards the point of resistance.