Unlock the secrets of momentum trading with the “MACD – Moving Average Convergence Divergence Trading Guide,” a must-have resource available as a free PDF on ebookhay.net. Spanning 23 pages, this guide dives deep into the Moving Average Convergence Divergence (MACD), one of the most popular indicators for identifying trends and optimal entry points. Perfect for traders of all levels, it simplifies complex concepts with clear explanations and practical strategies.
Discover how the MACD uses two exponential moving averages to signal momentum shifts, with its MACD line, signal line, and histogram revealing bullish and bearish trends. Learn to master crossovers, centerline movements, and divergences to anticipate market turns. The guide goes further, combining MACD with powerful tools like the Relative Vigor Index, Money Flow Index, and Triple Exponential Moving Average for enhanced precision.
What is MACD?
The Moving Average Convergence Divergence (MACD) is a technical indicator used to identify new trends or momentum and show the connection between the price of two moving averages.
Whilst there are different types of indicators you can use in your trading including ‘Lagging, Leading and Confirming‘ the MACD uses the difference between short-term price and long-term price action trends to anticipate future movements.
MACD fluctuates above and below zero lines, highlighting both momentum and trend direction as the moving averages converge and diverge.
The MACD has three major components that are used to give signals;
○ MACD line – is a result of taking a longer-term EMA and subtracting it from a shorter term EMA
○ Signal line – EMA of the MACD line described into 1 component
● Histogram – measures the distance between MACD and its signal line. The difference between the two oscillates around Zero Line