MACD Strategy

[Fox]

Hi
Went to the school today and attended the class on "The Best Of MACD Entries"

How will I know from the below image whether the MACD is oversold or overbought
Is it the red MACD histogram(DOWNWARD) for oversold.
Green (Upward)MACD histogram for overbought

Regards

[willyw]

Hi
Went to the school today and attended the class on "The Best Of MACD Entries"

How will I know from the below image whether the MACD is oversold or overbought
Is it the red MACD histogram(DOWNWARD) for oversold.
Green (Upward)MACD histogram for overbought

Regards

Fox, I found an article on MACD for you. You can read it as an added knowledge for you and have a better understanding.
http://stockcharts.com/school/doku.p..._average_conve

[Bogdan G]

Hi
Went to the school today and attended the class on "The Best Of MACD Entries"

How will I know from the below image whether the MACD is oversold or overbought
Is it the red MACD histogram(DOWNWARD) for oversold.
Green (Upward)MACD histogram for overbought

Regards

MACD is not meant for overbought/oversold identification. Oscillators with fixed levels are meant for that. Of course, you can assume it has become OB/OS by the distance it traveled but that is very subjective and I would recommend other indicators for identifying OB/OS.

[Fox]

Thanks willy .The article was grt.
Thanks Bogdan For ur reply as well

In this article by Michael Hodges
https://www.thatsucks.com/best-macd-...gy-yes-we-can/

I am bit confused here.

A signal is generated when MACD is overbought or oversold and makes a crossover at the same time that prices have retreated past the SMA’s.What this means is in a downtrend you will wait for prices to correct above the moving averages. When that happens a signal will be generated when the MACD oscillator is in the overbought side and makes a bearish crossover. This crossover and signal can be predicted with the MACD histogram. If you look in the example provided the MACD histogram is making a nice divergence and foreshadowing the lower high and subsequent buy signal generated by this system.

What I understood is -based on the SMA you will identify the market is bullish or bearish.And we ll only call on a bullish market and put in a bearish one.

Then I have to wait for the signal.From the above mentioned paragraph I only got the idea to look for MACD/Signal line cross over.

If MACD crosses signal line downwards -PUT
MACD crosses signal line up- Call

What else should I look for?

[Martin Kay]

Hi Fox, you might want to check the following thread - https://forums.thatsucks.com/threads...tries-strategy
Hope that helps

[Fox]

Hi Fox, you might want to check the following thread - https://forums.thatsucks.com/threads...tries-strategy
Hope that helps

Thanks Martin I ll follow up on the that thread u mentioned many Thanks

[Michael Hodges]

Hey Fox,

MACD is a great tool and I am excited for you to learn to use it.

1- There are two kinds of MACD to be aware of, the oscillator which looks a lot like a stochastic, rsi or other....and the histogram. The histogram is what most people use.
2- Bogdan is right in that MACD (histogram) is not typically used to identify overbought and oversold, when I used those terms what I meant was when MACD(histogram) was bearish and when MACD was bullish.
3- The difference between the histogram and the oscillator is that the oscillator does move up and down in the range with a short and long term ma. The long term moving average is the "signal" line, the short term gives the signal by crossing over. The oscillator version can be used exactly the same way as as stochastic or any other oscillator such as rsi, awesome oscillator, and many many others. This is good but the histogram is where MACD really comes into usefulness.
4- The MACD histogram measures the distance (x) between the two moving averages and displays that number as a bar with (x) height either over or under 0. When the moving averages are moving apart they are diverging, when they are moving closer together they are converging, this is why the indicator is called MOvinag Average Convergence Divergence Analysis. This indicator measures market momentum and is one of the most widely used indicators. The most basic signal is when you get a zero line crossover but the indicator is so good and I use it in so many ways I could literally write a book.



There are some great articles on MACD on the main bots site, the ones you found and that Martin/Bogdan have pointed you to. I also have some more discussion on MACD on my blog but I think that this thread is can now be an education in MACD. Here is a picture of some different types of MACD, I have to run now, hair cut cant' miss it again, but I'll be back later. Peace out.

[Michael Hodges]

And I always use the standard setting regardless of the time frame I am trading. Just FYI, I think if i remember correctly Bogdan uses some custom settings which is also perfectly OK and acceptable.

[Michael Hodges]

And my favorite signal is what I call a Convergence of Divergence, it can pretty powerful.

[Fox]

Hey Fox,

MACD is a great tool and I am excited for you to learn to use it.

1- There are two kinds of MACD to be aware of, the oscillator which looks a lot like a stochastic, rsi or other....and the histogram. The histogram is what most people use.
2- Bogdan is right in that MACD (histogram) is not typically used to identify overbought and oversold, when I used those terms what I meant was when MACD(histogram) was bearish and when MACD was bullish.
3- The difference between the histogram and the oscillator is that the oscillator does move up and down in the range with a short and long term ma. The long term moving average is the "signal" line, the short term gives the signal by crossing over. The oscillator version can be used exactly the same way as as stochastic or any other oscillator such as rsi, awesome oscillator, and many many others. This is good but the histogram is where MACD really comes into usefulness.
4- The MACD histogram measures the distance (x) between the two moving averages and displays that number as a bar with (x) height either over or under 0. When the moving averages are moving apart they are diverging, when they are moving closer together they are converging, this is why the indicator is called MOvinag Average Convergence Divergence Analysis. This indicator measures market momentum and is one of the most widely used indicators. The most basic signal is when you get a zero line crossover but the indicator is so good and I use it in so many ways I could literally write a book.



There are some great articles on MACD on the main bots site, the ones you found and that Martin/Bogdan have pointed you to. I also have some more discussion on MACD on my blog but I think that this thread is can now be an education in MACD. Here is a picture of some different types of MACD, I have to run now, hair cut cant' miss it again, but I'll be back later. Peace out.

BRILLIANT MICHAEL...Will try that out and keep u posted..