Moving Average Convergence Divergence, Understanding How MACD Works
1 min readJul 30, 2022
MACD is an indicator to detect overbought and oversold by looking at the relationship between long-term and short-term moving averages.
The standard MACD that is built into the Metatrader platform has the following components:
- MACD Signal Line-usually displayed as a dotted red line-
- MACD Histogram-in the form of vertical lines
- The MACD Zero Line
How does this component work?
A histogram is an indicator that predicts whether the trend is strong enough or not. If the histogram is getting longer, it means that the momentum is getting bigger (the downtrend is getting stronger). However, if the histogram is getting shorter, then there is an indication that the momentum is decreasing. This will usually be followed by a correction.
In addition to the histogram, MACD can also be used to find entry signals.
The method is quite easy. Read More >>
