Forex swing trading macd
MACD divergence is a popular tool, yet highly forex swing trading macd. The MACD–moving average convergence divergence–indicator is popular among traders and analysts, yet few really understand it. Divergence on the MACD is one of the ways the indicator is used and takes two forms.
When the price of an asset is moving one direction and the MACD in the other, that’s divergence. This type of signal is supposed to warn of a reversal, but as discussed below, the signal is random and often inaccurate. Traditionally this indicates the price is losing momentum and prime pickings for a reversal. This also tends to be a very poor trading signal.
The MACD moving in the opposite direction as price isn’t always a warning sign. Without going into the math of the indicator, monitoring the MACD in relation to price action reveals a few problems which could affect the MACD-divergence trader. Note: If trading with a technical indicator, any indicator, be aware of exactly how it functions, so you know all of its drawbacks and benefits. After a strong price rally MACD divergence isn’t useful. By dropping, while the price continues to move higher or move sideways, the MACD is showing momentum has slowedbut it doesn’t indicate a reversal.