NOTES: MACD- MOMENTUM INDICATOR

Moving Average Convergence Divergence

Type of Indicator: Lagging Indicator
-Data used in MACD is based on the historical price action of the stock. Since it is based on historical data, it must necessarily “lag” the price.

Consist of 3 components
1) MACD Line FORMULA: EMA 12-EMA 26
2) Signal Line FORMULA: 9-day EMA of MACD Line
3) MACD Histogram: FORMULA: MACD LINE - SIGNAL LINE

Functions
1) Momentum indicator for Bullish or Bearish
2) Helps in determining long or short position
3) Entry ideas

TIPS (Must not be used as stand-alone Indicator)
-BUY: When MACD Line Cross over the Signal Line + Reversal Candle/ Pattern
-SELL: When Signal Line Cross over MACD Line + Reversal Candle/ Pattern
-READY: When the MACD Histogram does not show big changes, ready for incoming big momentum either bullish or bearish

Idea sourced from:
-Investopedia
-YouTube Rayner Teo: MACD Indicator Secrets: 3 Powerful Strategies to Profit in Bull & Bear Markets

TH_K

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TH_K