This oscillator consists of two half-exponential ranging turning line of zero (0). These two lines are called MACD (Moving Average Divergence Converge) and Signal .
Signal The line is the exponential average of the MACD line , and serves to try to determine possible changes in short-term trend.
The MACD is calculated by subtracting a moving average of 12 days of the price of a share of its 26-day moving average also based on the price. The result is an indicator that oscillates above and below zero.
When MACD is above zero , means the average of 12 days is greater than the average of 26 days. This situation is bullish because it shows that current expectations (ie, mean 12 days) are more bullish than previous expectations (ie, the average of 26 days). This implies an upward shift, or up in the lines of supply and demand.
When the MACD falls below zero, meaning that the 12-day moving average is less than 26 days, which leads to a downward shift in the lines of supply and demand.
In summary, the MACD line provides information medium and long term trends in the value and Signal line provides information on the behavior of the MACD line very short term.
The interpretation of both lines is:
The buy signal occurs when the line Signal MACD line cut "up" to "down." The sell signal when the line Signal MACD line cut "down" a "above." The greatest utility of this oscillator is to confirm that the trend is bullish or bearish.
In summary: There are oscillators that can detect a change in trend over time such as RSI, Momentum or the crossing of socks. The MACD is useful to confirm that the trend will force the medium and long term.
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