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Synchronize Time and Place for Forex Trading
Forex Trading Course
    About Lesson

    MACD (Moving Average Convergence Divergence)

    MACD is shown beneath the charts, in a separate section. It is built of two moving averages (short-term and long-term) plus a histogram that measures their gaps.

    In simple terms – It is an average of two different timeframes’ averages. It is not the prices average!

    Tip: The most important area in the MACD is the intersection of the two lines. This method is very good at spotting reversals of trends in good time.

    Disadvantage – You need to remember that you are watching averages of past averages. That is why they lag behind real-time price changes. Still, it is quite an effective tool.

    Example: Pay attention to the intersections of the long average (green line) and the short (red). See on the price chart how well they alert to a changing trend.

    intersections of the long average and the short avergae

    Tip: MACD + Trend line work well together. Combining MACD with the Trend line may show strong signals that tell us of a breakout:

    Combining MACD with Trendline

    Notice the duplication between the Trendline’s alert and the MACD’s alert (Sell signals).

    Tip: MACD + Channels are also a good combination:

     MACD + Channels are also a good combination

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