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Moving Average Convergence Divergence Indikator
MACD
The Moving Average Convergence Divergence indicator, called in the following MACD, has developed around running of the last years to one of the mostly used technical indicators. Due to his calculation and interpretation he is used in nearly every market situation. He is described as a trend follower as well as an oscillator. His basis, 3 GDs, point to the trend-following character.
The MACD subtracts 2 GDs of each other. Indeed, these both GDs are always computed on exponential basis. The course oscillates around the zero line. A value above the zero line displays that the short GD lies above the long GDs, a value below the zero line expresses with it the exact opposite. In the name of contained convergence / divergence consideration takes effect by the evaluation of the distance between the zero line and MACD course. The further the line is away from the zero line, the stronger is the divergence. A growing divergence points to an intensification of the prevailing trend, a drop on an impairment of the trend. The trend turn in the MACD line is vital. To gain control of this, has introduced Gerald Appel, the inventor of the MACD, the second line, a GD of the MACD line. Hence, the signals are generated with the cut of this line with the real MACD line. Calculation:
MACDt = EMA_1t - EMA_2t EMA_1t = EMAx(Ct) = EMAt-1 +((2:(x + 1))* (Ct-EMAt-1))
EMA_2t = EMAy(Ct) = EMAt-1 +((2:(y + 1))* (Ct-EMAt-1))
Trigger(t) = EMAz(MACDt) = EMAt-1 + ((2:(z + 1))*(MACDt - EMAt-1))
Interpretation:
A cut of the MACD line bottom up with the trigger generates a purchase signal, a cut top down a sales signal. The signal is the stronger or more successful, the greater the divergence is or the further the MACD course is away from the zero line.Beside this standard use the MACD is used also as an easy trend indicator. If the MACD rises, the value is in the upward trend, he falls, the value lies in the downward trend.
A little more difficult application is the use of the MACD to the investigation of divergences with the basis value. More difficultly, because you must mark in this case a trend lines to come to a result. An example would be developing new highest levels in the basis value, while the highest values already go down in the MACD. In this case is with a quick trend return to count so to the trap of the basis value.
Preferences:
Real MACD: 12 and 26 days
Trigger-Line: 9 days
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