Forex Indicators_5. Forex Moving Average Convergence Divergence MACD

Lesson 5: Forex Moving Average Convergence Divergence MACD MACD, or Moving Average Convergence Divergence, is a momentum indicator that shows the relationship between two moving averages of prices . It is used to identify new trends and find entries for your trades. MACD consists of four components; a faster moving average, the slower moving average, a histogram that shows the difference between both the moving averages and a 0 line. Although there is more than one strategy for using the MACD in your trading. Trading the moving average crossover: For long positions, you wait ‘til the faster moving average crosses above the slower one. Note - you are looking only at crossovers that happened above the zero line. Close your position when it crosses back below. For short positions, wait ‘til the faster moving average crosses below the slower one but only if it is below the zero line. Close your position when it crosses back above the slower moving average.