MACD indicator helps find the best time to buy or sell in the forex market!

In a MACD chart, you will see three numbers.

l The first is the number of periods to calculate the faster-moving average.

l The second is the number of periods in the slower moving average.

l The third is the number of bars to calculate the moving average of the differencebetween the faster and slower moving averages.

For example, if you see “12, 26, 9” as the MACD parameters (which is usually the default setting for most charting software), you could interpret them as below:

12 represents the previous 12 bars of the faster moving average.

26 represents the previous 26 bars of the slower moving average.

9 represents the previous 9 bars of the difference between the two moving averages.

This is plotted by vertical lines called a Histogram (the green lines in the chart above). There is a common misconception when it comes to the lines of the MACD. The two lines that are drawn are NOT moving averages of the price. Instead, they are the moving averages of the DIFFERENCE between two moving averages. In our example above, the faster moving average is the moving average of the difference between the 12 and 26-period moving averages.

The slower moving average plots the average of the previous MACD line. Once again, according to our example above, this would be a 9-period moving average, which means that we are taking the average of the last 9 periods of the faster MACD line and plotting it as our slower moving average.

This smooths the original line even more, which gives us a more accurate line.

The Histogram simply plots the difference between the fast and the slow moving average. It may sometimes give you an early sign that a crossover is about to happen. If you look at our original chart, you can see that as the two moving averages separate, the histogram gets bigger.

This is called a MACD divergence because the faster moving average is “diverging” or moving away from the slower moving average. As the moving averages get closer to each other, the histogram gets smaller. This is called convergence because the faster moving average is “converging” or getting closer to the slower moving average.

How to Trade Using MACD

Because there are two moving averages with different “speeds”, the faster one will obviously be quicker to react to price movement than the slower one. When a new trend occurs, the fast line will react first and eventually cross the slower line. When this “crossover” occurs, the fast line starts to “diverge” or move away from the slower line, it often indicates that a new trend has formed.

From the chart above, you can see that the fast line crosses under the slow line and correctly identifies a new downtrend. Notice that when the lines cross, the Histogram temporarily disappears. This is due to the difference between the lines at the time of the cross is 0.As the downtrend begins and the fast line diverges away from the slow line, the histogram gets bigger, which is a good indication of a strong trend. Lets take a look at an example.

In EUR/USD‘s 1-hour chart above, the fast line crosses above the slow line while the histogram disappears. This suggests that the brief downtrend could potentially reverse. EUR/USD begins shooting up as it starts a new uptrend. Imagine if you go long after the crossover, you would’ve gained almost 200 pips! There is one drawback to MACD. Naturally, moving averages tend to LAG behind price. After all, its just an average of historical prices. Since the MACD represents moving averages of other moving averages and is smoothed out by another moving average, you can imagine that there is quite a bit of lag. That means MACD is still one of the most favored tools by many traders.

WikiFX App is a third-party inquiry platform for company

profiles.WikiFX has collected 17001 forex brokers and 30 regulators and

recovered over 300,000,000.00 USD of the victims.

It, possessed by Wiki Co., LIMITED that was established in Hong

Kong Special Administrative Region of China, mainly provides basic

information inquiry, regulatory license inquiry, credit evaluation for

the listed brokers, platform identification and other services. At the

same time, Wiki has set up affiliated branches or offices in Hong Kong,

Australia, Indonesia, Vietnam, Thailand and Cyprus and has promoted

WikiFX to global users in more than 14 different languages, offering

them an opportunity to fully appreciate and enjoy the convenience

Chinese Internet technology brings. WikiFXs social media account as

below:

Facebook:

USA Area：https://www.facebook.com/WikiFX.US/

UK Area：https://www.facebook.com/Wikifx.UK/

Nigeria Area：https://www.facebook.com/WikiFX.ng

Twitter：

Areas where English is an official language：https://twitter.com/WikiFX_Eng

More details about how to download WikiFX App:

Please download WikiFX APP from links below or scan QR code ：

iosAppStore: https://apps.apple.com/us/app/fxeye/id1402501387？l=zh&ls=1

Googleplay: https://play.google.com/store/apps/details？id=com.foreigncurrency.internationalfxeye

If you have any questions, please feel free to contact us at wikifx@wikifx.com

Worried about missing out latest trends in the volatile market？ WikiFX ‘News Flash’ is here to help!

With 24-hour real-time update of forex market data by minute, you

can seize the opportunity of every bullish market! Bookmark the link

below and follow the market trends immediately!

UK Area：https://live.wikifx.com/uk_en/7x24.html

USA Area：https://live.wikifx.com/us_en/7x24.html

Nigeria Area：https://live.wikifx.com/ng_en/7x24.html

Wiki Forum Forum Function:

In order to help more investors, WikiFX has launched the WikiFX

Forum forum, which aims to provide urgently needed and professional

services to Nigerian forex investors.

The exposure function of “WikiFX Forum” includes the following features:

1: Allow investors who have been defrauded by illegal broker to complain directly in the forum (as shown in the screenshots)

As long as there is sufficient evidence, a review panel and an

executive team will contact the broker to discuss the complaint or

expose it directly through the media. Here are the exposure channels:

2: Block low score brokers from entering the forum

3: Monitor suspicious communication in real time, and directly spot and deal with suspicious fraud;

4: Negotiate with highly reliable brokers selected by WikiFX in the secure environment of WikiFX Forum.

WikiFX APP exposure channel: https://activities.wikifx.com/gather/indexng.html

Information page to understand forex scam and exposure channel: https://activities.wikifx.com/gather/indexng.html

Website exposure channel: https://exposure.wikifx.com/ng_en/revelation.html