Also known as similarities and differences smma; It was founded by Chalar Appel. It is a technical analysis tool to track the price trend and judge the trading opportunity.
When MACD is applied, the 12 moving average is the fast moving average and the 26 moving average is the slow moving average. First, calculate the deviation value (DIF) between the two moving average values as the basis for judging the market, and then find the 9-day smma of DIF, which is the MACD line, to judge the trading opportunity.
Principle of MACD indicator
It is a kind of swing line, which is used to measure market power and follow or imply a trend. Use the aggregation and separation of two smma EMAs with different speeds (short-term and long-term) to judge the market and choose the trading opportunity.
The function of MACD index
It keeps the effect of the moving average, overcomes the defect that the moving average frequently sends out false signals, and improves the effectiveness of trend judgment. It is the main reference index to judge the foreign exchange market.
Conventional application of MACD index
(1) When DIF and MACD are above 0, it is a bull market, and DIF's upward breakthrough of MACD is a buy signal; If DIF breaks through MACD downward, it can only be considered as regression and profit taking.
(2) When DIF and MACD are lower than 0, it is a short market. At this point, if DIF breaks through MACD downward, it is a sell signal; If DIF breaks through MACD upwards, it can only be considered as a rebound and can be temporarily made up.
(3) When DIF falls below the 0-axis, it is a selling signal, that is, the signal that the moving average of 12 day crosses the moving average of 26 day. When DIF crosses the 0 axis, it is a buy signal, that is, the moving average of 12 crosses the moving average of 26.
(4) Judgment of "deviation signal". When there are two or three recent lows in the stock price trend, and the DIF(MACD) does not match the new lows, you can buy it; When there are two or three recent highs in the stock price trend, and the DIF(MACD) does not match the new high, it can be sold.