|
MACD
Description
The Moving Average Convergence/Divergence indicator (MACD) is
calculated by subtracting the value of a 0.075 (26-period)
exponential moving average from a 0.15 (12-period) exponential
moving average. A 9-period dotted exponential moving average (the
"signal line") is automatically displayed on top of the MACD
indicator line.
Interpretation
The basic MACD trading rule is to sell when the MACD falls
below its 9-period signal line. Similarly, a buy signal occurs when
the MACD rises above its signal line.
A variation of the MACD can be created by plotting the following
formula:
macd() - mov(macd(), 9, E)
Then change the indicator line style to a histogram and plot a
9-period dotted moving average of the indicator.
In a system test of this indicator, sell arrows are drawn when the
histogram peaked and turned down and buy arrows are drawn when the
histogram formed a trough and turned up.
Tips
Additional variations on the MACD (e.g., different moving
average time periods) can be created using the
Price Oscillator indicator.
|
