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Traders of Stocks, Options, Forex, CFD's, Futures and more, if you don't quite know the best way to use MACD, then you need to read below!
The theory being that when the blue line crosses the red line to the up side, it is bullish. When the blue line crosses the red line to the downside it is bearish. But there is a big problem with this theory on it's own as you can see from the bottom chart. It is very common to find crossovers happening quite regularly in a sideways market, and the buy and sell signals will see you whipsawed in and out of the market with losses. Unfortunately, this negative side of MACD will often scare traders off from using MACD in a way that gets better results. The other dynamics to MACD are called divergence, and utilizing the zero line in conjunction with support and resistance. Divergence is split into two parts, positive divergence and negative divergence, and it is basically a visual representation of a weakening in price coupled with increasing strength in MACD, or a weakening in MACD coupled with increasing prices. There are two ways of spotting divergence and that is with the MACD line itself and/or the histogram. The other dynamic is to use the zero line, or what it sometimes called the waterline, as a way of confirming a bullish or bearish move with some form of support and resistance in price, and usually this follows a divergence signal. If you'd like to see a free downloadable video explaining how to use these dynamic methods of MACD then visit our free membership page for details. Or you can simply sign up for our free membership here. To see benefits of A Traders Universe membership along with your MACD video click here
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The Government Doesn’t Want You to Read This Article About the Financial Crisis
December 2, 2008
Editor’s Note: This article has been excerpted from a free issue of Robert Prechter’s monthly market letter, The Elliott Wave Theorist.
The full 10-page market letter, Be One of the Few The Government Hasn’t Fooled, can be downloaded free from Elliott Wave International.
By Robert Prechter, CMT
“Who Will Benefit From The Housing Act?”
This question is an actual headline from a national daily paper. The real answer is: mortgage lending corporations, developers, real estate agents, speculators and politicians. The government is also pledging tax money to providers of “financial counseling” and grants for speculators who want to “buy and renovate foreclosed housing”; in other words, it will hand tax money to charlatans and unfunded wheeler-dealers. But a far better headline would have been, “Whom Will the Housing Act Hurt?” The answer to that question is: (1) prudent people, i.e. savers, earners, renters and people who have waited to buy a house at a reasonable price; and (2) innocent people, i.e. taxpayers.
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The information contained here on this web site, in any email or on any video does not contain specific recommendations to buy or sell at particular prices or times, nor should any of the examples presented be deemed as such. There is a risk of loss in trading futures and futures options, stocks and stocks options, forex, CFD's and any other financial product and you should carefully consider your financial position before making any trades. The reference to statistical probabilities does not pertain to profitability, but rather to the direction of the market. The size and the duration of the markets move, as well as entry and exit prices ultimately determines success or failure in a trade and is in no way represented in these statistics. This is not, nor is it intended to be, a complete study of technical analysis and should not be deemed as such.
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