RAC - Charts & Price Action, page-13461

Hi ... that's a good question. I simply use the default MACD 12,26,9 setting - always have, but I always assumed it was the SIMPLE Moving Average MACD.

I just use the free software - so the MACD is the default one - but no specifics of whether it's SMA's or EMA's.

However - your software shows EMA's for the MACD ... hence you will get a shorter term bias, hence why I expect your MACD looks different.

Try a chart changing the MACD's to SIMPLE (SMA) Moving Averages for the Bollinger Band and I expect your chart will replicate mine.

The question of EMA's V's SMA's are interesting. Not so much for Bollinger Bands (IMO) but more for key support and resistance lines.

In the case of SMA's / EMA's the key ones for me are the 20, 50 and 200. Some TA'ers use shorter term ones but I have learned to average in and average out with my trading rather than stick to specific trigger points, and I will momentum trade short term off a 15 minute chart rather than the daily chart if I want to use shorter term signals (rather than changing from SMA's to EMA's). I also refer to the daily ticker tape looking for bot activity to make my entry and exit decisions ... as I expect the bots/algos are just operating in real time looking at the actual demand/supply data rather than charts.

There is one other thing ... in Bear markets with stocks like Biotechs I have always assumed slower chart response - as there is very little retail demand and the wholesalers (institutions etc) are more in control ... whereas in Bull markets with the likes of mining stocks (flavour of the month stuff etc) the chart response is far quicker as retail demand dominates with the lemmings chasing one hot stock one day and another the next.

So EMA's will work better in Bull markets and SMA's in Bear ones - in general!

Momentum trading doesn't work so well in Bear markets either - as you are trading against the bots more - whereas in Bull markets you are trading against keyboard warriors.

But it takes years of trial and error to see all this and slowly understand the significance of the specifics of TA ... AND the thing to remember is to know you will never always be right - the objective is to get better at your TA hit rate and learn to bail when a stock just isn't going anywhere OR change you trading pattern with that stock - which is what I have done with RAC as I believe it is unique - has a significant seller AND and an institutional manipulator behind the scene.