bakerdeshun

LTCUSD Using Price Action & MACDivergence as buy/sell indicators

COINBASE:LTCUSD   Litecoin
I'm working on trading based on Divergences in price action and the MACD volume levels. I am observing if Higher Highs (HH) in price action are simultaneously resulting in parallel HH's for the MACD levels below and vice versa for Lower Lows (LL). If this is observed we are observing a divergence in price action and average momentum of trades. Remember that the MACD weighs the average of the last candlesticks (my MACD weighs the last 13 and 21 candlesticks on a 1hr chart), therefore if price action occurs too fast, the average of the MACD will not correlate with the change in price action unless the price action change is substantial enough that it alters the Moving Average significantly to cause a correlation to be observed.

I am using the divergences of the MACD as a strategy to predict when entry and exit points as trend changes are preparing to occur. This is because changes in price action can be very misleading causing emotional decision making that is irrational. In most cases either the trader will get tricked in to either chasing the market (Dumb Money) or closing out of a position prematurely because of sudden movements in price action.

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.