Internet Make Money in Forex is essential to know the technical indicator MACD (Moving Average Convergence Divergence). This indicator is used to identify the movements of moving averages to determine the start of a new trend either upward or downward.
The MACD indicator consists of three components:
1 .- Number of periods that are used to calculate the fast moving average
2 .- Number of periods that are used to calculate the slow moving average
3 .- Number of bars that are used to calculate the difference between fast and slow moving averages
By default, most programs use the "12,26,9" and this is interpreted as follows: 12 bars
fast moving average
26 bars of the slow moving average
9 bars the difference between two moving averages.
The following figure shows the MACD on the market USD / JPY (Dollar - Japanese Yen). As you can see there are only two curves: The bar, called the MACD and the red dashed called "signal."
MACD curve (components 1 and 2) is formed by the difference between moving averages and the signal curve is formed by the MACD based on the number of bars in component 3.
Operation: Basically
operation is made between the MACD crossing the signal and the MACD. When the MACD crosses above the signal is in the negative zone of the MACD is a clear buy signal, unlike If the MACD crosses the signal in the positive zone on a clear sell signal, as shown in the figure below:
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