Extremely important RSI MACD correlation for all to know
Learn the in’s and outs trading with RSI and MACD
Most traders are thrown off with these two indicators when both in use when RSI is resting at or above/below overbought and oversold zones. This explanation will answer most of the similar questions I have been getting
This is a 1 hour chart for NZDCAD. Looking at the RSI and MACD indicates a clear sell should play out. I have presented an example when that does not happen and how to avoid this.
If MACD lines and signal lines have made their cross above or below the zero lines a trend is generally established. Often we will see MACD and signal lines make multiple up and down crosses while well above or below MACD 0 lines. This confirms a trend has continued with pullbacks.
The way to determine the true future direction is to correlate the remaining hourly charts specifically the 2 hour chart. I think the 2 hour chart represent the most accurate trend play out.
So as seen here on the 1 hour chart although the MACD and signal line crossed with RSI in overbought zone the two hour MACD chart represented a strong trend going up through MACD zero line and histogram bins confirming the trend is continuing up. The next step is to observe correction on the 2 hour chart. Once correction begins the 3 hour chart represents its trend continuation with MACD and signal line flowing up through the 0 line. Then the same observation with 4 hour chart.
Ultimately this is how I determine when a longer term trend is going. Please ask questions and let me know what you think!
Most traders are thrown off with these two indicators when both in use when RSI is resting at or above/below overbought and oversold zones. This explanation will answer most of the similar questions I have been getting
This is a 1 hour chart for NZDCAD. Looking at the RSI and MACD indicates a clear sell should play out. I have presented an example when that does not happen and how to avoid this.
If MACD lines and signal lines have made their cross above or below the zero lines a trend is generally established. Often we will see MACD and signal lines make multiple up and down crosses while well above or below MACD 0 lines. This confirms a trend has continued with pullbacks.
The way to determine the true future direction is to correlate the remaining hourly charts specifically the 2 hour chart. I think the 2 hour chart represent the most accurate trend play out.
So as seen here on the 1 hour chart although the MACD and signal line crossed with RSI in overbought zone the two hour MACD chart represented a strong trend going up through MACD zero line and histogram bins confirming the trend is continuing up. The next step is to observe correction on the 2 hour chart. Once correction begins the 3 hour chart represents its trend continuation with MACD and signal line flowing up through the 0 line. Then the same observation with 4 hour chart.
Ultimately this is how I determine when a longer term trend is going. Please ask questions and let me know what you think!