MACD - Moving Average Convergence / Divergence
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.
The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. Moving average convergence divergence (MACD) indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls.
Within this indicator, what strategy does Anny offer?
1. MACD crossing over the signal line
3. MACD trend reversal (divergent price peaks)
1. MACD crossing over the signal line
Logic of the algorithm:
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Scans for a cross-over of the MACD line over the signal.
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Fires the cross occurs below the histogram line.
Configuration:
- Pre-configured for the candle of 1h (going below 30 min is not advised)
2. MACD trend convergence
Logic of the algorithm:
- Identifies if the last entries of the histogram represent an uptrend.
- Evaluates if the signal line is within the histogram.
- Evaluates if the price peaks of the histogram are in favor of the trend.
Configuration:
- Pre-configured for the candle of 1h
3. MACD trend reversal (divergent price peaks)
Logic of the algorithm:
- Identifies if the last 2 entries of the histogram are trending up and if before that, there's a meaningful downtrend block.
- Evaluates if the signal line falls outside the histogram.
- Evaluates if the price peaks of the histogram are against the trend.
Configuration:
- Pre-configured for the candle of 1h
Hints💡
- For an additional confirmation, combine it with another indicator.