What is MACD and how to use it? 📶

Moving Average Convergence Divergence is a momentum indicator that is used as a technical analysis tool. When you use the MACD indicator on charts, you will see a blue line and a yellow line with histograms.

How to interpret them? 🤔

• Blue Line is basically the MACD line, which is plotted by taking the difference between 26 EMA and 12 EMA
• Yellow Line often called the signal line, is the 9 Day EMA of the MACD line.
• The histograms represent the difference between the value of the MACD Line and the Signal Line.
• If (MACD-Signal Line) > 0, then a green histogram will be there, if (MACD-Signal Line) < 0, then a red histogram will be there.
• The larger the histogram, the greater is the momentum

How to use MACD to take trades?👌

• Generally, whenever the blue line goes above the yellow line, there is a buy signal and if the blue line goes below the yellow line, then it is a sell signal.
• However, in order to double-check it, I check the MACD indicator on daily as well as weekly charts to take medium-term trades.
• If as per the above interpretation, charts on both the time frames show the same signal, then I go ahead and check other technical indicators as well to build a solid rationale for my trade.
• If there is a divergence between what both the charts indicate, then, I prefer to wait and watch for further movements.

Attached is a chart of #DLF in which I used MACD as a signal to take a trade and was able to capture the upside.💸

Please share your views too!

Chartbusters - chart - 9653325