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The MACD (which stands for "Moving Average Convergence/Divergence"), developed by Gerald Appel, is a momentum indicator showing the relationship between two moving averages. The MACD is basically the difference between a 26 day and 12 day EMA (exponential moving average). Next, a 9 day EMA is plotted on top of the MACD to show buy or sell signals. Many day traders use the MACD when trading as a quick substitution for calculating support and resistance, so it will obviously be of limited use to SureFireThing Camarilla Equation traders,as they already have the best support / resistance levels obtainable.

The three most popular ways to use the MACD are crossovers, overbought & oversold conditions, and divergences. A crossover means sell when the MACD falls below the signal line. likewise, buy when the MACD rises above the signal line. Overbought & Oversold indicator - when the 12 day EMA pulls away hard from the 26 day EMA (i.e., the MACD rises), price is probably overbought. Reverse for an oversold condition. Divergences are used to spot when a current trend may be about to reverse and occur if the MACD diverges from the price. If the MACD is making new lows yet pricedoesn't, its bearish. If the MACD is making new highs while price fails to reach new highs, it is actually bullish. Calculate the MACD by subtracting the value of a 26 day EMA from a 12 day EMA, then plot a 9 day EMA of the MACD (the "signal" line) on top of the MACD.

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