MACD Divergence

[Blaiserboy]

Article

 

[ULTIMATEONE]

Sorry to bump an old thread, but its probably better than creating a new one.

Been analysing graphs with the divergence method and see sometimes it works and doesn't work.

By work and doesn't work I mean I am unable to correctly assume which way the price *is likely* to follow.

For example,

1)if the slope of the price is on a decline and the MACD on an incline does that mean potential end result for a Bullish move on the price?

2) if the slope of the price is increasing and the MACD on a decline does that mean potential end result for a Bearish move on the price?

3) OR does it mean when the trend lines are opposite that whatever the trend of price is (bull/bear) then it will REVERSE its current state of motion


I hope someone can help clarify this - I've been using 5 Min timeframe also - and custom indicators on anyones reccomended list?

Regards

 

[jonboy123]

yes, price down, macd up = price may go up

trenlines opposite, i dont understand.

TA does not work every time like an exact science.

 

[ULTIMATEONE]

yes, price down, macd up = price may go up

trenlines opposite, i dont understand.

TA does not work every time like an exact science.

Thanks for the fast reply.

Do you know if parallel lines means anything when doing the MACD - does it mean continue in its current momentum or does it not mean anything?

thanks once again

 

[jonboy123]

no idea mate, parrallel lines.
parrallel universe by chili peppers = amazing song.

if youre learning about MACD or divergence, read all you can find on one topic.

about parrallel lines, you should check back data to see if there are any common things happening with your indicators/lines etc.

 

[Blaiserboy]

Thanks for the fast reply.

Do you know if parallel lines means anything when doing the MACD - does it mean continue in its current momentum or does it not mean anything?

thanks once again

Perhaps you can post a chart illustrating your question.

 

[Meta]

Hi all,

I use this MACD Divergence indicator
http://www.forexmetatraderindicators.com/macd-divergence-mt4-indicator/

 

[dan79]

I have been working extensively with MACD and Stochastics, and i have found that very often divergences in them is a leading indicator of impending trend reversal. More so with MACD. I have found that divergences that are clearer on the charts are more tradeable. By this i mean that on the price chart, the pivots are more evident. But the problem with divergence trading is that of timing the entry. How do we judge the correct entry point? Can anyone suggest a good way to enter a divergence trade? I have tried working with moving average cross-overs, but the signals are delayed.

 

[Blaiserboy]

I have been working extensively with MACD and Stochastics, and i have found that very often divergences in them is a leading indicator of impending trend reversal. More so with MACD. I have found that divergences that are clearer on the charts are more tradeable. By this i mean that on the price chart, the pivots are more evident. But the problem with divergence trading is that of timing the entry. How do we judge the correct entry point? Can anyone suggest a good way to enter a divergence trade? I have tried working with moving average cross-overs, but the signals are delayed.

My thinking is that you will have to observe price action to get the right entry.

Lets see what others say

 

[Pipsaholic]

The fact is a lot of retailers, market makers use it gives the MACD and possibly Stocs more weight than other indicators it can be useful I have found it good along with price action.

 

[trende]

To be honest don't rely only on one indicator. Always add few indicators for your study for example MACD and stochastic( overbought/oversold) Indicator and pay attention to the volume.

You can use any indicator you are comfortable with having good knowledge, exp will come automatically with time.

It always work for me help me and it waive out if any false signal is there.

Cheers njoy trading

 

[colion]

To be honest don't rely only on one indicator. Always add few indicators for your study for example MACD and stochastic( overbought/oversold) Indicator and pay attention to the volume.

You can use any indicator you are comfortable with having good knowledge, exp will come automatically with time.

No indicator should be used by itself. When multiple indicators are in synch the odds tilt in the trader's direction. However, it is important that the indicators not be from the same category (i.e., volatility, momentum, etc.).

 

[trende]

I am using MACD divergence and it works quite good. The important thing to note here is, I always use my indicator with another one so that it can minimize the false signal, in any.

Like I use MACD together with any important chart patterns or support/resistance or volume etc depending how market is behaving.

You can get a lot information on MACD and stock screener based on MACD in the below link.

Tutorial on Moving Average Convergence/Divergence