So I am trying to learn trading (MACD).

in #btcusd7 years ago

So basically one of the most used indicators in trading is the MACD also known as the moving average convergence divergence.

I will try by best to explain my charting below as well as how I understood it. I am not an expert by any means (as you can tell lol) so please do not consider this as trading advice but the goal is here is to come together as a community as learn together.

So here goes:
MACD (12, 26, 9): So if we were to draw a moving average line on our chart itself with a 12 period exponential average and another one with a 26 period exponential average, we would have the two beautiful lines shown as below.

Red and Yellow

The red is an exponential moving average line with a length of 12 and the Yellow is one with a length of 26 period.

Now the MACD are the two lines in the lower half of the chart below. The blue line is calculated using the above two EMA's and the red line is the moving average of the MACD (12, 26) line.

BTCUSD

All this mumbo jumbo aside.

Now here is the interesting part, whenever the blue line crosses over the red line, it indicates a buy area and whenever the red line crosses over the blue one it indicates a sell. Now this is not as easy as it seems as this is just one indicator and its supposed to be used in conjunction with other indicators to come up with a thorough analysis (what I have been told).

The histogram that you see on the chart is also an interesting indicator and it depicts the push of the market. It can be used in various ways to show how the momentum of the market is ongoing. Mostly "W" patterns are bullish market structures and "M" patterns are bearish market structures. You can also draw lines over the histogram to see if the market is consolidating and if its gonna break out.

Wheeee

Again, this could be quite off base and I am only trying to learn so please do your due diligence but I would appreciate if you want to share your two cents with my in the comments sections below :)

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