Moving Average Convergence Divergence is an technical analysis indicator developed by famous market technician Gerald Appel.
It is used by traders to determine when to buy or sell a security, based on the interaction between a line constructed from two moving averages and a "trigger line."
How it Works:
The MACD line is constructed from two moving averages -- a 12-period, or faster moving average, and a 26-period, or slower moving average. The MACD calculation subtracts the 26-period from the 12-period to create a single line. This is known as the main line.
The next step is to compute the nine-period exponential moving average of the main line. This line is then called the trigger line. It is the interaction between the main line and the trigger line that certain types of trading signals are generated.
Also note that the MACD is plotted on a chart with zero as the equilibrium. The amount of divergence between the main line and trigger line is also plotted on this chart.
During a period when there is a strong trend, the two MACD lines will grow further apart (divergence). During sideways consolidation, they come closer together (convergence), often crisscrossing one another several times.
The MACD is best used in a market that is trending either higher or lower. This way there is less criss-crossing between the main line and the trigger line, and the MACD's signals are clearer
- Forums
- ASX - By Stock
- macd
macd, page-3
-
- There are more pages in this discussion • 9 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Featured News
TG1
TechGen Metals kicks off airborne geophys survey at Sally Downs copper play – a first for the permit
KAI
Pilbara Minerals buys land off Kairos part of its York gold project for $20M – and a 2% royalty on any PLS gold sales