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MACD & EMA 12, 26 Cross Trading Strategy

MACD & EMA 12, 26 Cross Trading Strategy

Quick Summary of MACD: The MACD is a moving average oscillator that shows potential overbought/oversold phases of market fluctuation. The MACD is a calculation of two moving averages of the underlying price/indicator. Buy/Sell interpretations may be derived from crossovers (calculated from the Signal/Periods argument), overbought/oversold levels of the MACD and divergences between MACD and actual price.

  • MACD (Moving Average Convergence/Divergence) has in its base Moving Averages.
  • It calculates and displays the difference between the two moving averages at any time.
  • Standard indicator settings for MACD (12, 26, 9) are used in many trading systems.
  • MACD line is created when longer Moving Average is subtracted from shorter Moving Average.
  • MACD divergence trading method used not only to predict trend turning points, but also for trend confirmation.
  • How to Trade With MACD

  • MACD line and trigger line crossover outperforms EMAs crossover. Besides being early on crossovers MACD also is able to display where the chart EMAs have crossed:
  • When MACD (12, 26, 9) flips over its zero line, if indicates that 12 EMA and 26 EMA on the chart have crossed.
  • When MACD line crosses Signal line (top or bottom) to evaluate buy or sell.
  • Another entry strategy is to find 2 most recent swings high or low on the chart and draw a trend line trough them; and then set an Entry order on the breakout of that trend line.
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Posted on

February 19, 2019

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