What is the Moving Average Convergence Divergence (MACD) Indicator?
The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator. The indicator tells us the relationship between two moving averages of the security price. To determine MACD subtract the 26-period exponential moving average from the 12-period exponential moving average. There is a nine-day exponential moving average of the MACD that is used as the "signal line." Whenever MACD crosses the signal line that is an indication to sell or buy.
The histogram indicates strength. Dark green means the bulls are stronger. Light green means the bulls are weak. Dark red means the bears are strong. Light red means the bears are weak. The centerline for MACD is 0.
What is a bearish divergence?
A bearish divergence occurs when the price rise to a new high but the indicator new peak is lower than the previous high peak.
Forecastability of the bearish divergence
The bearish divergence indicator predicts a bearish future for the stock. However, do not assume a bearish divergence will be bearish all the time. There is an exception: in a strong bull market, the bearish divergence will transform itself and the uptrend may continue.
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Greenfield
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Disclosure: Article written by Greenfield. A market idea by Greenfield Analysis LLC for educational material only.
The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator. The indicator tells us the relationship between two moving averages of the security price. To determine MACD subtract the 26-period exponential moving average from the 12-period exponential moving average. There is a nine-day exponential moving average of the MACD that is used as the "signal line." Whenever MACD crosses the signal line that is an indication to sell or buy.
The histogram indicates strength. Dark green means the bulls are stronger. Light green means the bulls are weak. Dark red means the bears are strong. Light red means the bears are weak. The centerline for MACD is 0.
What is a bearish divergence?
A bearish divergence occurs when the price rise to a new high but the indicator new peak is lower than the previous high peak.
Forecastability of the bearish divergence
The bearish divergence indicator predicts a bearish future for the stock. However, do not assume a bearish divergence will be bearish all the time. There is an exception: in a strong bull market, the bearish divergence will transform itself and the uptrend may continue.
Thank you for reading!
Greenfield
Remember to click "Like" and "Follow" to see more articles.
Disclosure: Article written by Greenfield. A market idea by Greenfield Analysis LLC for educational material only.
Comment:
Disclosure: Chart reading is subjective information. Subjective information means that the information comes from personal opinions, assumptions, interpretations, and beliefs. Therefore, one should do their own research and come to their own decision. I am not a financial advisor.
Comment:
I added MACD Valley A and MACD Valley B. MACD Valley B is higher than MACD Valley A. Everything else is the same.
