Trading Trends with MACD

RELATED QUOTES

SymbolPriceChange
EURJPY=X113.1750-0.081

Article Summary: Creating a Forex trading strategy does not have to be a difficult process. Today we will review trading trends with MACD.

MACD (Moving Average Convergence Divergence) indicator is one of the most commonly used indicators in Forex trading. MACD was developed in the 1970s by Gerald Appel as an oscillator that graphically displays moving averages in relation to price. MACD falls into the same family as RSI, CCI and Stochastics, but this indicator can be used to assist traders with finding market momentum, direction, and entries by understanding the MACD line, signal line, zero line and histogram. Before the MACD can become useful to us as traders, we first need to better understand its components.

The MACD Line is displayed in red in the indicator below and is built by comparing a 12 period EMA (Estimated Moving Average) to a 26 period EMA. By comparing moving averages of different durations we can change shifts in trend as it oscillates up and down. Our signal line is comprised of a 9 period EMA of MACD. Just as the name of the indicator implies, we are looking for these averages to diverge (move apart) or converge (move together). Normally MACD traders will either look for the MACD line to cross above the Signal Line to buy in an uptrend or fall below the signal line to sell in a downtrend.

Learn Forex – MACD Components

Trading_Trends_with_MACD_body_Picture_2.png, Trading Trends with MACD

(Created using FXCM’s Marketscope 2.0 charts)

The second component of the indicator is the MACD histogram. This component is specifically designed to help us see if the MACD Line is moving away or closer to our Signal Line. If the histogram is above the zero line that means the MACD Line resides above the signal line. If the histogram is below the zero line the inverse is true. It is important to note, the stronger the MACD Line pulls away from the signal line, the great the histogram will read.

The last component we have to the MACD indicator is the Zero Line. This point of reference divides our indicator in half and allows us to interpret market direction. If the MACD Line is over the Zero Line this is interpreted as the market having bullish momentum. Conversely, traders will watch for bearish momentum as the indicator moves below the Zero Line. Traders will keep a close watch on this value to identify potential momentum shifts and directional trend changes in the market.

Learn Forex – EURJPY 4Hour Trend with MACD

Trading_Trends_with_MACD_body_Picture_3.png, Trading Trends with MACD

(Created using FXCM’s Marketscope 2.0 charts)

Once we understand all the components, we can then put them to use for trading trends. Above is an example of a traditional MACD crossover strategy using the Zero Line as a filter on a EURJPY 4Hour chart. Currently the EURJPY is in an extended uptrend so traders will look for bullish crossovers comprised of the red MACD Line crossing over the blue Signal Line. Traders will only want to buy when momentum to the upside is the strongest which means any crossovers occurring under the zero line will be excluded.

---Written by Walker England, Trading Instructor

To contact Walker, emailwengland@fxcm.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list,CLICK HEREand enter in your email information

Looking for an oscillator strategy to trade? Take our free CCI training course and learn new ways to trade with this versatile oscillator.Register HEREto start learning your next CCI strategy!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Turkish tanks enter Syrian territory to fight IS
    Turkish tanks enter Syrian territory to fight IS AFP News - 6 minutes ago

    A dozen Turkish tanks on Wednesday entered Syrian territory to take part in the battle to push Islamic State (IS) jihadists out of the town of Jarabulus, an AFP photographer reported. … More »

  • Biden in Ankara as Turkey launches Syria operation
    Biden in Ankara as Turkey launches Syria operation AFP News - 9 minutes ago

    US Vice President Joe Biden arrived in Turkey on Wednesday for critical talks with its leadership as Ankara launched a military operation to drive Islamic State jihadists out of a key Syrian border town. In the highest-ranking visit by a Western … More »

  • UK carpet seller Headlam ups prices after post-Brexit sterling weakness Reuters - 14 minutes ago

    British carpet distributor Headlam (HEAD.L) has raised its prices after a weaker pound in the wake of the Brexit vote pushed up the cost of imports from continental Europe, showing the potential inflationary impact of sterling's decline. Headlam, … More »

  • Oil prices down in Asia, Brent stays below $50 AFP News - 15 minutes ago

    Oil fell in Asia Wednesday on oversupply fears, after data showed an increase in US crude stocks, and as traders took advantage of a recent rally to book profits. Prices had closed higher Tuesday on news that Iran was willing to join calls by OPEC … More »

  • Commodities group Glencore trims loss in first half of 2016 Associated Press - 27 minutes ago

    Swiss commodities producer Glencore says it narrowed its net loss in the first half of 2016, after paring down billions of dollars' worth of assets to slash debt amid a difficult market for raw materials. ... … More »

  • Foundation donors who met, talked with Clinton Associated Press - 30 minutes ago

    Hillary Clinton met or talked by phone with at least 154 people from private interests, such as corporations, during her time as secretary of the state. More than half those people had donated either personally ... … More »

  • US oil and gas lease sale to be broadcast live on internet
    US oil and gas lease sale to be broadcast live on internet Associated Press - 38 minutes ago

    The federal government says that, for the first time, it's broadcasting an oil and gas lease sale live on the internet. The sale Wednesday offers all 23.8 million acres available for drilling and exploration ... … More »

  • Asian markets struggle, oil losses widen on glut woe
    Asian markets struggle, oil losses widen on glut woe AFP News - 50 minutes ago

    Most Asian markets slipped Wednesday as traders trod water ahead of a key speech by Federal Reserve boss Janet Yellen this week, while oil suffered fresh losses on persistent glut worries. With speculation growing that US interest rates could rise … More »

  • Australian carrier Qantas soars to record profits
    Australian carrier Qantas soars to record profits AFP News - 53 minutes ago

    Australian carrier Qantas Wednesday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive restructuring. The results were also boosted … More »

  • Asian stocks meander as investors await Fed speech; Oil down
    Asian stocks meander as investors await Fed speech; Oil down Associated Press - 54 minutes ago

    Asian stocks meandered Wednesday as investors awaited fresh cues from Federal Reserve on the outlook for interest rates. Markets were steady following the submarine launch of a ballistic missile by North ... … More »

  • CORRECTED: Australian carrier Qantas soars to record profits AFP - 59 minutes ago

    Australian carrier Qantas Wednesday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive ... … More »

  • European stocks slip at open AFP - 1 hour 10 minutes ago

    Europe's main stock markets fell at the start of trading on Wednesday, with London's benchmark FTSE 100 index down 0.6 percent to 6,838.35 points. Frankfurt's DAX 30 also lost 0.6 percent to 10,531.14 ... … More »

  • Emerging Assets Fall With Europe Shares as Fed Bets Boost Dollar Bloomberg - 1 hour 12 minutes ago

    Oil slumped after data showed a jump in U.S. stockpiles. MSCI gauges of developing nations’ shares and currencies dropped by the most in at least three weeks, while the Stoxx Europe 600 Index snapped a two-day advance. A gauge of dollar strength … More »

  • Samsung, Tencent surge in race to become Asia's most valuable firm
    Samsung, Tencent surge in race to become Asia's most valuable firm Reuters - 1 hour 16 minutes ago

    Tencent Holdings Ltd and Samsung Electronics Co Ltd are racing to be crowned Asia's most valuable company as expectations for robust earnings growth push their share prices to record highs. "These companies can grow earnings despite weaker global … More »

  • WPP beats first-half net sales forecasts, boosted by weak pound Reuters - 1 hour 20 minutes ago

    The group, run by high-profile businessman Martin Sorrell, said its British operations had also traded more strongly in July than the previous quarter which it said perhaps reflected a "post-Brexit vote recovery" driven by a weaker pound. WPP said … More »

  • Frankfurt charm offensive for Brexit-wary London firms
    Frankfurt charm offensive for Brexit-wary London firms AFP News - 1 hour 22 minutes ago

    The marketing team of Frankfurt never expected its English-language dummy website to attract new businesses would actually go live after Britain's European Union referendum. "We hadn't really assumed that we would need the site at all," spokeswoman … More »

  • Stressed pension funds urge UK to sell more inflation-proof debt Reuters - 1 hour 33 minutes ago

    Pension funds are pushing the British government to issue more index-linked bonds to insulate them from inflation and help cope with worrisome accounting deficits that have intensified since Britain voted in June to leave the European Union. The … More »

  • Glencore's underlying profit falls, lowers debt target
    Glencore's underlying profit falls, lowers debt target Reuters - 1 hour 38 minutes ago

    Glencore reported first-half adjusted underlying profit (EBITDA) down 13 percent at $4 billion (3.04 billion pounds), but said it was on track to sell assets and lowered its net debt target to between $16.5 billion and $17.5 billion this year. It … More »

  • OneSavings more keen on lending to professional landlords after Brexit Reuters - 1 hour 43 minutes ago

    OneSavings, which offers residential mortgages, buy-to-let and SME loans, said that while it was not directly exposed to the EU, its business could be hurt by a slowdown in the housing market and demand for mortgages, in case of an economic … More »

  • China’s $100 Billion Chip Supremacy Bid Deemed Unrealistic (1) Bloomberg - 1 hour 47 minutes ago

    China is one of the world’s largest consumers of semiconductor devices thanks to its manufacturing might, and is planning to spend more than $100 billion to become also a premier supplier to the planet. It’s also driven consolidation among domestic … More »

  • Oil prices fall on U.S. crude stocks build; fears over China demand
    Oil prices fall on U.S. crude stocks build; fears over China demand Reuters - 1 hour 48 minutes ago

    Oil prices fell on Wednesday as an unexpected build in U.S. crude inventories weighed on markets, along with concerns that Chinese crude demand could falter as Beijing clamps down on alleged tax evasion in the oil industry. International Brent … More »

  • North Korea Successfully Launches Ballistic Missile From Sub (1) Bloomberg - 1 hour 58 minutes ago

    The missile flew about 500 kilometers, suggesting the nation’s missile technology has improved from previous launches, a South Korean defense ministry official said. The projectile was fired at about 5:30 a.m. from waters near the city of Sinpo … More »

  • Glencore Profit Tumbles 66% After Metal and Coal Price Rout (1) Bloomberg - 2 hours 5 minutes ago

    Last year’s collapse in commodities and Glencore shares forced the firm to roll out a rescue strategy that included scrapping its dividend, selling $2.5 billion of stock, disposing of assets and slashing spending. Glencore earlier today announced a … More »

  • PBOC Adds Funds in 14-Day Reverse Repos First Time in Six Months Bloomberg - 2 hours 8 minutes ago

    The People’s Bank of China auctioned 50 billion yuan ($7.5 billion) of the contracts in open-market operations at 2.4 percent Wednesday, according to a statement on its website. The central bank also offered 90 billion yuan of seven-day reverse … More »

  • Automakers lead Tokyo stocks higher by close AFP - 2 hours 17 minutes ago

    Tokyo stocks finished higher Wednesday with the market led by strong gains among automakers including Toyota and rival Nissan. The benchmark Nikkei 225 index jumped 0.61 percent, or 99.94 points, to close ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.130.00+0.78%
    N21.SI
    0.985-0.025-2.48%
    Y92.SI
    0.157+0.008+5.37%
    AFC.SI
    0.99+0.02+2.06%
    H64.SI
    0.2550.0000.00%
    5ME.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.225+0.025+12.50%
    Y35.SI
    0.156+0.011+7.59%
    QS9.SI
    0.34+0.03+11.48%
    BLA.SI
    0.515+0.060+13.19%
    BHU.SI
    1.91+0.16+9.14%
    5ER.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.011-0.115-91.27%
    QF6.SI
    0.23-0.17-42.50%
    AWI.SI
    0.205-0.055-21.15%
    I06.SI
    0.45-0.10-18.18%
    BFK.SI
    0.191-0.029-13.18%
    BHO.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3519+0.0006+0.04%
    USDSGD=X
    1.5275+0.0005+0.03%
    EURSGD=X
    1.7871+0.0044+0.25%
    GBPSGD=X
    74.0810-0.028-0.04%
    SGDJPY=X
    5.7338-0.0017-0.03%
    SGDHKD=X
    2.9848+0.009+0.30%
    SGDMYR=X
    9,802.5371-14.167-0.14%
    SGDIDR=X
    4.9202+0.0068+0.14%
    SGDCNY=X
    1.0304+0.0015+0.15%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,342.50-3.60-0.27%
    GCZ16.CMX
    18.86-0.06-0.33%
    SIU16.CMX
    103.89-1.81-1.72%
    ^XAU
    2.11-0.01-0.45%
    HGU16.CMX
    47.37-0.73-1.52%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.14+0.01
    ^FVX
    1.55+0.01
    ^TNX
    2.240.00
    ^TYX