The MACD is an oscillator that is used by traders to determine the turning points of the market. Basing on this fact the MACD oscillator can be used to determine the high ands and the lows of the market making it a reliable tool for timing entries and exits in the market. In this article I will focus on mainly how the MACD indicator can be combined with the trend line and be used for trading.
Drawing trend lines based on the MACD
To draw the trend lines one has to use the MACD oscillator set to default settings. The MACD oscillator can be added to the chart by selecting it from the inbuilt indicators on the Jforex platform.
Using the tops and bottoms formed on the MACD oscillator, one can accurately identify the highs and lows of the market thus eliminating any subjectivity. By joining these highs or the lows using the ray or trend line tool one can accurately determine the direction of the trend i.e. whether the trend is bullish or bearish.
In the chart below, one can draw a rising trend line by connecting two higher lows being formed. The higher lows must coincide with the higher lows being formed on the MACD oscillator.
In the next chart, we draw a falling trend line by con…
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