Using Moving Average Convergence/Divergence (MACD)

Moving Average Convergence/Divergence (MACD) is one of the simplest and most reliable technical indicators available. While it is a combination of the moving average and other trend following factors, the resulting plot creates a line that oscillates above and below zero, without any upper or lower limits.

Essentially it measures the difference between two different exponential moving averages. Allowing you to determine the trend of a current stock.

All the terminology and ideas can get congested in text, so we have created this video that clearly shows how to accurately use MACD to predict any future trend.

Before watching the video keep these ideas in mind:

• Positive MACD – when the gap between the 12-day EMA and the 26-day EMA is widening, which represents that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing, indicating a bullish period for the price plot.
• Negative MACD – when the negative gap between the faster moving average and the slower moving average is expanding. Downward momentum is accelerating, indicating a bearish period of trading.