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In the last article we discussed the MACD, we now see a quick summary of how to work with this indicator, which is considered one of the best to use technical analysis of currency market.

First, the main line of the MACD, sometimes also called the fast line of MACD is calculated by taking the difference between two exponential moving averages, EMA. Most of the time using the EMA at 12 and 26 periods.

The signal line of MACD, called as a trigger line is an EMA of the main line of the MACD. This uses the popularly 9 EMA.


L ‘of the MACD histogram is a bar graph that shows the difference between the two lines, or the main line and the signal line. Mathematically, this is to subtract the value of the MACD signal line from the main line of the same.

We can also use shorter periods to make the exchange of currencies. In this case, the shorter periods can also be used when the market is very volatile.

How to use the MACD?

• the main line of the MACD crosses the signal line
• the main line of the MACD crossing the center line
• a divergence or convergence

Let us see these three cases, in order to better understand how to use the MACD. Starting from the first point, which is the main line of the MACD crosses the signal line of MACD. When the main line of the MACD crosses the signal line, we have a signal of change of market trends.

If the main line of the MACD moves from the bottom up, then you have a recent upward momentum is higher than normal. So the bullish trend is getting stronger. You have a bullish crossover of the moving average when the MACD moves above the value of the 9 EMA. This crossover, for a given currency pair is always bullish, thus indicating that we are in time to buy. This is probably the most common signal.

Related posts:

1. MACD, how can you tell if you have to go long or short
2. Use the waiting for the MACD crossover
3. The MACD histogram
4. The indication that the new trend with MACD
5. The MACD and the histogram, attention to false signals

Tags: currency market, Forex, indicator, Technical Analysis, trading

This entry was posted on Wednesday, March 23rd, 2011 at 1:30 am and is filed under Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.