MACD + OsMA Indicator
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Indicator MACD (moving average convergence divergence, which translates as convergence - divergence or convergence - divergence of moving averages) on the one hand refer to a class of oscillators, on the other - it can be attributed to a class of complex medium, since it is an improved visual perception of two simple moving averages (or exponential moving averages.)
There are two ways of constructing and analyzing MACD:
MACD line, which is often used for trend analysis;
MACD-Histogram, according to the method of analysis and the value belongs to a class of oscillators (OsMA).
Most trading platforms made them divide into two lights, in this case, both these indicators are one unit in a common window. The accuracy of this indicator is strongly dependent on the selected parameters of moving averages and volatility, the wider the corridor of price movement, the more accurate indicator gives signals.
1. MACD Line
To calculate the line of MACD moving average price (usually taken to be the exponential moving average) with a smaller period exponential moving average is subtracted s1 s2 c large period.
MACD = EMA (S2)-EMA (S1)
EMA (S2)-an exponential moving average with a long period of price.
EMA (S1)-an exponential moving average with a short period of price
This is a quick line MACD. For fast MACD line EMA applied to the parameter S3), resulting in a signal line
Signal MACD = EMAS3 * MACD
EMAS3-smoothing exponential moving average with a short period on the difference between the other two moving.
As the price is usually taken to the closing price of Close, but there are other options (Open, High, Low, Close, Median Price, Typical Price, etc.)
The default is taken following infusion MACD:
EMA (S1) - (short) with a period of 12 (two weeks)
EMA (S2) - (long) with a period of 26 (per month)
EMAS3 - (smoothing the difference) with a period of 9
2. MACD Graph Line
The graph drawn two curves.
Second Signal MACD
3. Formula OsMA (MACD histogram)
To use OsMA (MACD histogram) is necessary to subtract the signal line from the line of MACD.
OsMA = MACD - Signal.
4. Schedule OsMA (MACD-Histogram)
OsMA measures the distance between the line and the MACD signal line. This difference is depicted in a histogram - a sequence of vertical columns.
If the MACD is above signal line, the value is positive and OsMA delayed up from the horizontal axis (zero). If the MACD is below the slow, the negative and OsMA depicted below the horizontal axis. When the MACD and signal lines cross, OsMA becomes equal to 0. If the gap between the MACD line and signal line increases, OsMA becomes wider. When the two lines converge, OsMA becomes. At this parameter to judge the scope of the trend.
5. Linear Signals MACD
In MACD has two vertical levels, to which he aspires, but never fully reaches them. Near the intersection of these levels is fast MACD and signal lines should be seen as a signal to buy or sell. If the first line of MACD crosses the signal line from the bottom up, it talks about the upcoming trend upwards, that is, on an upward trend. Accordingly, if the first line crosses the signal line from the top down, this indicates a trend downwards (downward trend).
The appearance of high or low on the signal line means that you can soon be followed by the MACD signal and should be prepared to deal.
If the MACD is above zero line, then the market uptrend, MACD crosses the zero, respectively, from bottom to top line gives a buy signal. The strength of this signal depends on what were the previous motion MACD. If MACD is above the zero line for a long time, and then began to fall, crossed the zero line from the top down, it is seen as a strong signal to sell. If MACD is in negative territory for several months, then rise above zero and then back below the zero line, most likely, indicates only a temporary correction.
If the MACD is below zero, then the market downtrend, respectively, the intersection of the linear MACD zero line from top to bottom gives a sell signal. It is also important, how long before the MACD is below zero.
When used in MACD divergence, bearish divergence is formed when it speaks of the weakness of the current upward trend and may soon spread. That is a possible, but not about the spread, so do not immediately open position against the current upward trend. In such cases it is better to wait for confirming signals, such as breaking a trend line or other signal analysis systems. Bullish divergence can be weakly confirmed by MACD crosses its signal line downwards. Differences (divergence) are rare signals MACD, but as a rule, advance warning of a possible new price movement.
If formed bearish convergence, ie a new low on the chart below the previous one, and a new low on the chart of the MACD indicator is above the previous, it is said the weakness of the current downward trend and the likely market soon turn up. However, as in the case of bullish divergence, it is not necessary to open the position to buy, without waiting for more solid evidence of a trend reversal. Bearish convergence can be confirmed by the MACD crosses weakly its signal line upwards.
Multiple divergence (triple and more Bulls divergence and convergence Bear) are treated as well as usual, with the only difference being that are stronger signals MACD.
When he linear MACD is below 0 and crosses the signal line from the bottom up, then, if there is no bearish convergence, the most probable price increases.
When MACD is above 0 and crosses the signal line from the top down, if there is no bullish divergence is most likely to fall.
If the market is clearly not a trend, reaching a maximum MACD indicates that short-term rates are significantly deviated from the long-term prices, a weak sell signal. If the MACD outlined its minimum - this is a weak buy signal. The strength of these signals increases when the maximum or minimum were indeed abnormal, ie, go beyond the apparent meaning to you.
The MACD as well as a graphical analysis of the price, you can use a line of support, resistance, and figures technical analysis.
6. Signals OsMA (MACD-Histogram)
OsMA slope is not talking about the current preponderance of buyers and sellers, and how to change the balance of power. Tilt up suggests that purchasers are becoming even stronger than before (but not necessarily stronger than the sellers), and the downward slope indicates that sellers are getting stronger (but not necessarily that they have more customers), so the slope is signal OsMA. On how to change the slope of OsMA can make assumptions about the rate of increase of strength of bulls or bears. Change in the slope to level 0 with the "down" to "up" gives a buy signal. Change in the slope of the "up" to "down" gives a sell signal.
If the market is an increasing trend, while the slope OsMA down, it means that the trend growth rate gradually decreases and the need to start looking for the point of sale. Conversely, if the market downtrend and OsMA grows, it means that the speed of falling prices and decreased gradually to think about closing short positions, or thinking about buying.
In most cases, the highs and lows very well OsMA anticipated high and low prices, so the appearance of such highs and lows on the chart the indicator MACD, should prepare for appropriate action. But it is to prepare, not to make purchases and sales. For example, when OsMA reaches its maximum during the rise of prices, the upward trend in its highest development and the next maximum on the price chart, is likely to be greater than the previous one. Accordingly, if OsMA falls to new low in a downtrend, it is likely that the new minimum price will be lower than the previous one.
Divergence (bearish divergence and convergence Bear) allow to catch the main points of turns and the beginning of a new trend.
MACD and OsMA give too many false signals on intraday charts, so the MACD indicator is better to use for a period of days or more.
Line MACD indicator is sometimes considerably delayed the formation of trend signals. MACD indicator signals can be confirmed by the ADX Wilder. If the ADX is rising, so the trend is strong and the MACD will give good support, if the ADX is falling, so the trend has insufficient strength and the MACD may be false.
As in most cases, the lower settings MACD, the more false signals gives an indicator, the more settings MACD, the more signals it transmits. Optimal settings for MACD does not exist, the market is always changing and what was relevant yesterday, today may be different, so experiment with the settings MACD may be helpful.
And so on the basis of the above, summarize and give a brief specification of the signals:
1. Buy when the MACD fast line crosses the signal line from below the top, and OsMA stops falling and begins to move upward.
2. Sell when the MACD fast line crosses the signal line from the top down, and OsMA stops growing and begins a downward spiral.
3. Sell when the MACD is above the zero line for a long time, and then began to fall, and crossed the zero line from the top down.
4. Buy when the MACD is below zero line for a long time, and then began to grow and crossed the zero line from below.
[I] In its opinion on this indicator, I will join thousands of audience of traders and investors, namely that it is very useful in the present day is a very strong competitor to all other indicators, even the newest and technologically advanced. You may also want to say that based on the MACD written many advisers.
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