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[Indicator] Moving Average Convergence-Divergence (MACD)

ProTrader

Forex Supporter
Developed by Gerald Appel in the late seventies, the Moving Average Convergence-Divergence (MACD) indicator is one of the simplest and most effective momentum indicators available. The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter moving average. As a result, the MACD offers the best of both worlds: trend following and momentum. The MACD fluctuates above and below the zero line as the moving averages converge, cross and diverge. Traders can look for signal line crossovers, centerline crossovers and divergences to generate signals. Because the MACD is unbounded, it is not particularly useful for identifying overbought and oversold levels.

Note: MACD can be pronounced as either "MAC-DEE" or "M-A-C-D".

Here is an example chart with the MACD indicator in the lower panel:

macd-0-qqqqexam.png
 
many trader use this indicator because easy to understand and read. if the macd histogram cross the zero line that mean the price will change direction. although actually the market condition not always easy to read by macd and its make the macd indicator not work at all.
 
Yes that is correct its easy to inderstand that is why many traders chose to use it but my experience with this indicator is that sometime its act after the market signal which make it difficult atime to trust it but the best is just to try and trade with it with combination of others indicators
 
MACD might be the most used indicator because of its simplicity and usefulness. Price action traders can apply many ways using it, such as divergence, cross-over and swing trading.
 
MACD indicator is very much useful for swing and long-term traders. It serves both as a trend following and momentum indicator. However, MACD will not serve well when used for day trading. This is because of the lag it faces. However, it enables a trader to understand impending reversal because of divergence. This is usually employed as an indicator by a day trader to confirm signals generated by other indicators.
 
this is my best indicator which i am using with H4 time frame and also some times with H1 with the perfect currency pair which is eur/usd and i like this indicator because the signal of this one is very good with H4 time frame and make at least 20 pips with each chance i got
 
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