Move the average convergence scatter, English is MOVING AVERAGE CONVERGENCERGENCENCE, Abbreviation MACD It is a widely used technical analysis tool, which is mainly used to judge the strength of stock price trends and momentum.It was invented by Gerald Appel in the 1970s.
It should be noted that the average convergence of mobile is a lagging indicator, and at the same time, a large number of misleading signals will appear.Therefore, when used, please be sure to combine the fundamental analysis of other technical indicators and investment targets.
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Directory of this article
- What is moving average convergence?
- Move average convergence of transaction signals
- How is the moving average convergence scattered?
- The advantages and limitations of mobile average convergence scatteredness
- How to combine the average convergence of mobile with other indicators?
What is moving average convergence?
Moving average convergence scattering is a dynamic index based on Exponential Moving Average.
The MACD indicator is based on the relationship between the moving average of different time cycles.It usually includes the following three parts:
- MACD cable (or DIF): This is the difference between the two index moving average (EMA), usually the difference between EMA and long-term (such as the 26th) EMA in the short term.
- Signal line (or dea): This is the moving average of the index of a certain period of MACD (usually 9 days), which is used to smooth the MACD cable.
- MACD column: The difference between the MACD line and the signal line.When the MACD refers to the signal line higher, the column chart is positive (usually expressed in blue column).Red column expression).Its height and color changes can reflect the changes in market momentum and the strength of the trend.
Move average convergence of transaction signals
The transaction signal of the mobile average convergence scattered includes deviating, crossing and excessive trading.
Traders can identify these signals by observing the cross and signal lines and their relationship with the zero line.For example, the golden fork and dead fork show the intersection of two lines on the chart.Disposal needs to observe the price chart and MACD index chart at the same time to find the inconsistency between the price and the indicators.
Chart of the column diagram
The height and color changes of the column diagram can reflect the strength of the market momentum.
- If the pillar chart From negative to correct, Indicate that the market momentum has changed from weak to strong, which may be the signal of buying;
- If the pillar chart From positive to negative It shows that the market momentum to weakens may be the signal of the selling.
Leave
Disposal refers to the inconsistent trend between asset prices and MACD indicators.This situation usually indicates the upcoming trend reversal.There are two types of departure:
- Depart from: When the price is innovative, and the MACD is not hit, it is called the divergence, indicating that the trend of price rise has weakened, which may indicate the beginning of the decline.
- Depart from the bottom: When the price is innovative, and the MACD is not hit, it is called the bottoming off, indicating that the trend of price decline has weakened, which may indicate the beginning of the upward trend.
cross
Cross is the most common trading signal in MACD, which is divided into the following two:
- Golden fork: When the MACD line cross the signal line from bottom to top, it is called golden fork, which is usually considered a buy signal, which means that the trend will change from a decline to upward trend.
- Dead fork: When the MACD line cross the signal line from top to bottom, it is called a dead fork and is usually considered a selling signal, which means that the trend will change from upward trend to a downward trend.
Buy/sell
The distance between MACD and the zero line
When the MACD line is far from the zero line, it can be regarded as a market that may be purchased or sold.
- If the MACD line is far higher than the zero line, this may indicate that the market is overheating or buying, and the price may face the risk of callback or decline.
- On the contrary, if the MACD line is far lower than the zero line, this may indicate that the market is overly pessimistic or selling, and the price may have the potential to rebound.
The height of the macd columnar.
- The high positive value of the pillar may indicate the buying.
- Higher negative column charts may indicate sales.
How is the moving average convergence scattered?
Gerald Appel, the founder of the mobile average convergence, is a well-known technical analysis expert and investment strategist.
Appel developed MACD in the 1970s.He was not only a successful trader, but also a insight analyst and many best-selling authors about stock market investment.The focus of his work is to simplify market analysis and make ordinary investors more friendly and easy to understand.
When Gerald Appel first proposed the concept of moving average convergence dispersing in the early 1970s, it was widely welcomed by market analysts and traders for its simplicity and effectiveness.
Initially, MACD was designed as an indicator based on a mobile average, which was used to capture and confirm market trends and its possible reversal.
Over time, MACD has gradually evolved from a basic trend tracking tool to a more complex and multifunctional trading indicator.
Investors often combine the average convergence of mobile with other technical indicators, such as the combination of relatively strong and weak indicators, Bollinger belts, etc., so as to more comprehensively analyze the momentum and trend changes of market prices.
The advantages and limitations of mobile average convergence scatteredness
The average convergence of mobile, as a popular tool in technical analysis, has its unique advantages, but there are also some limitations.
advantage
- Easy to understand and apply: The calculation method of MACD is intuitive and simple.Even technical analysis can easily master its principles and application methods.
- Versatility: MACD can not only be used to identify market trends and momentum, but also provide potential trading points through departure and cross-signals.
- Applicability: MACD is suitable for different markets and time frameworks, including stocks, foreign exchange, futures and cryptocurrency markets.
- Trend tracking ability: MACD is an excellent trend tracking tool that helps traders to identify and follow the main trend of the market.
- Provide a clear signal: By observing the intersection of the MACD line and the signal line, and the departure phenomenon, traders can get relatively clear trading signals.
limitation
- Signal lag: As an index based on mobile average, MACD is inherently lagging.This means that the transaction signal may only appear after the trend has been formed for a while, causing traders to miss the best time to enter or exit.
- Misleading signal: Under specific market conditions, such as a market with a horizontal or no trend, MACD may generate misleading signals and lead to wrong transaction decisions.
- Need to be used in combination with other tools: Using MACDs alone may not be enough to provide comprehensive market analysis.Therefore, it is best used with other technical analysis tools and market analysis methods.
- Market environment sensitivity: The effect of MACD will be different under different market environments and volatility conditions.In the high volatility market, MACD may generate too much noise and misleading signals.
How to combine the average convergence of mobile with other indicators?
Although the average convergence of mobile is a powerful trading indicator, it may not be enough to capture all the dynamics of the market alone.
In order to improve the accuracy of transaction decisions, the combination of mobile average convergence dispersing with other technical analysis tools is a common and effective strategy.Here are some commonly used technical analysis tools and its use of mobile average convergence scattered.
1.Relative and weak index (RSI)
Relatively strong and weak index (RSI) is a dynamic oscillator that is used to evaluate the superb and oversold status of asset prices.Combined with MACD and RSI, you can provide a more comprehensive market perspective:
- When MACD shows a buying or selling signal, RSI can be used to confirm the effectiveness of these signals.For example, if MACD displays the buying signal and RSI indicates that the asset is not in an oversold, you may need to handle this buying signal carefully.
- The super-purchase or oversold threshold of RSI can be used as an exit signal to assist the trend signal provided by the MACD.
2.Bollinger belt
The volatility of the Bollinger belt is a volatility composed of upper, lower bands, and middle bands, which can be used to evaluate the range and trend strength of the market.Combining MACD and Bollinger can enhance the recognition of market trends:
- When the price is close to the upper or lower band of the Bollinger belt, the MACD can be used to confirm whether there is a possibility of continuing the trend.
- In a large fluctuating market, the expansion or contraction of the Bollinger belt can provide prompts about market power changes, and MACD can be used to confirm the direction and strength of these changes.
3.Mobile average (MA)
Combining MACD with the moving average of different cycles can provide additional evidence that can provide trend direction and strength:
- Long-term mobile average (such as 50 days or 200 days) can be used to determine the main market trend, while MACD can provide transaction signals within the trend.
- When the short-term mobile average traverses the long-term mobile average, the MACD trend transformation signal can be confirmed as a change in this trend.