MA Convergence/Divergence Analysis and MACD Signals

Developed & Created by Gerald Appel,

The MA Convergence/Divergence stands out as one of the most straightforward, dependable, and frequently applied trading indicators.

It is a momentum oscillator and also a trend-following indicator.

Construction

This indicator calculates the difference between two moving averages and plots it as the 'Fast' line. A 'Signal' line is then derived from the 'Fast' line and displayed within the same window panel.

'Fast' line - Blue Line
'Signal' line - Red Line

The 'standard' MACD values for the 'Fast' line is a 12-period exponential MA and a 26-period exponential MA and a 9-period exponential moving applied to the fast-line, this draws 'Signal' line.

Fast-line = difference between 12 & 26 exponential MAs
Signal Line = MA of this difference of 9-periods

MACD Analysis Signals - MACD - Simple MACD Strategy

Analysis and How to Generate Trading Signals

The MACD indicator is commonly used as a trend-following tool and proves most effective in analyzing and interpreting market trends. There are three primary methods for using the MACD to generate trading signals.

XAUUSD Cross-overs Gold Signals:

Fast line/Signal line Cross over:

A buy signal gets generated when Fast Line crosses above Signal-line
A sell signal gets generated when FastLine crosses below Signal Line.

Finally, you must commit to diligent study and significant effort - master every analytical concept presented here and apply these superior analytical methods and principles using a complimentary practice demo account.

Zero Line Crossover Signals:

When the Fast Line crosses above zero center-line a buy signal gets generated.
when the Fast Line crosses below zero center line a sell signal gets generated.

Divergence Trade:

Spotting differences between MACD and price action works well. It helps find spots for reversals or trend continuations. Two main types exist.

Classic Divergence Trade Setup Signals
Hidden Divergence Trade Setup Signals

Overbought/Oversold Conditions:

The MACD is also utilized to pinpoint potential instances of overbought or oversold conditions within price fluctuations.

These specific zones are established/derived when the shorter MACD lines diverge considerably from the central median line, signaling an overextension in price action, which typically previews a forthcoming return to more rational price levels.

MACD & Moving Average XAUUSD Cross-over System

This indicator can seamlessly be combined with other strategies to form a trading system. A particularly effective pairing is with the Moving Average crossover method, where a trade signal is generated when both indicators align in the same trend direction.