Lesson 5: Forex Moving Average Convergence
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 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
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.