The MACD...

Hi all,
I noticed when using the MACD, that the two averages if in positive
( above 0 level) indicate a positive trend, and if negative indicate a negative trend. So since i'm in this thing not even a month I first doubt of my considerationts, and ask before acting.....So am i missinterpreting it or is it true?
I know it is used a entry/ exit indicator, and that there may be other uses, is this one of them?
THX

Hey fxnoob. Your interpretation of MACD is quite reasonable. There are many uses for MACD but when you look deep into the construction of the code it is basically 2 moving averages. It is slightly more complicated but that explanation will do for now. So when the fast line crosses over the slow line you could very well be in an up-trend.

Hi fxnoob,
Since you have only been at it for a month I'll give the basics of Macd.
MacD stands for Moving Average Convergence Divergence
MacD is a trend follower/market momentum indicator/Oscillator that consists of two waves and a histogram.
And as you said above it has a MacD Wave and a MacD Signal (or Trigger Line) and generally when the Trigger Line crosses the MacD Line, you can expect the currency price to move in the direction of the MacD Line.
It also has a Water Line or Neutral Zero Line, under the Water Line generally think of the wave as inverted.
MacD also contains a Histogram which can be used similar to the volume on a share chart, that is it gives an indication of strength of movement.
MacD typically follows price in the same direction and can be seen as a copy cat of price, that is as price goes up so does MacD and vice versa for down.
The lower the lows on price, the lower the waves on MacD.
The higher the highs on price the higher the waves on MacD.
Swing points with higher highs will generally correlate with the top of the MacD Waves and vice versa with swing lows, because generally MacD follows the price, the peaks and troughs can form within 1 or 2 candles after the swings.
Then we have Divergence which are very consistent money maker, it is considered a leading indicator that allows you to get into a trade before the price movement actually occurs.
Remember MacD is a copy cat of price, well Divergence is when MacD Deviates or is different from price action.
So when MacD is behaving differently to price, Divergence is prenet and price will generally come back towards MacD.
In negative divergence to price in an uptrend the two MacD waves of different heights will generally be seen above the water line, the first wave on the left will be higher in height than the second wave on the right. Producing MacD lower highs while price is seen to make Higher Highs in the same time frame.
Price will generally come back towards the MacD waves, in other words look to go short.
Positive Divergence is the opposite of negative Divergence will generally move away from the MacD waves, in other words go long.
Then theres Neutralization and it occurs when you have had a rapid rise or fall in price movement, it simply means that the Trigger line and the MacD line are moving back towards the water line.
MacD Neutralization after a run up or down in Price is an indication that there will be further price action in the same direction from where it came.
Hope this helps Go Getter

thanks for the info, Good stuff.
Anyway what is the best setting for day trading???
What is the best setting for the stoch also??
Thanks for your time

Hi BigA,

I trade intra day and the settings I use are standart for MacD.
As for stoch I don't actually use it so I don't want to say in case I give you a push in the wrong direction.
Go Getter

It was downloading from the PFX site, which is a partner
of FF.

Articles from various source magazines -- SFO, S&C, CURRENCY TRADER...

Like the siggy;

Hopefully that thread had a positive influence on your life level.

12. 26. 9.

Take a 12 Bar SMA and
- a 26 Bar SMA and Then
Plot a 9 Bar SMA of the result to tell me what I should do right now.

Useless in my estimation

12:26:9.
Looks biblical...
12: Apparently construed to divide One 24 Hour period in two.

26: An overshoot, perhaps, of looking at a 24 Hour Period.

9: ____ gimmee your best guess____

MACD, To Me, Should Read...
"Last Session - Last 2 Sessions Triggered by Last 1/2 Session.


eg. 30 Min Chart.
MACD Input SB...
16 (8hrs)
8 (4hrs)
2 (1 Hr)

Thoughts?....

MACD was invented by Gerald Appel in the late '70s. In his book, Technical Analysis Power Tools for the Active Investors, he simply says that the longer EMA should be 2-3 times longer than the shorter EMA.

The MACD signal line was invented 6 years later by Thomas Aspray. He suggested using smoothing lengths of 3-9 periods and Appel later adopted these results in his own testing.

Besides 12-26, Appel mentions 19-39 and 6-19 most frequently in his book.

as a beginner I started to analyse this indicator and I want to ask you what's the best timeframe to work with it?

Your advices will be really useful to me!!!

MAC -------------- D we're loving it

Ha! I'm lovin' that Snowman!

..... and much, much more.



The video addresses TA of stocks, of course, but we all know that forex prices trend every bit as well as stocks', don't we?

Seriously, though, try typing in "MACD indicator", "stochastic", etc into YouTube's search facility - there's a wealth of good material there, especially if you find watching video-based examples more exciting than wading through pages and pages of written material.

Happy viewing,
David