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MACD is mainly used for reporting the direction of trend. Indicator is generating following signals:
- Crossover of MACD line and signal line
- Breaking zero line
- Divergence between price and indicator
MACD is lagging from price movement and this lagging give great probability for signal just before correction. In this cases there is also high probability for activating our stop loss and price after that to go in our direction. Our strategy is using price in conjunction with MACD, for conformation.
Rules for this strategy are:
For long position:
- MACD is making a divergence. The bar, where is approached highest point between to minimums is called signal bar.
- We go long when price breaks the highest value of signal bar. We place stop 5 pips below the signal bar
- When market is going up, we moved stop at some following local low or areas with consolidation
- We close our position when MACD crosses zero line or if price triggers our stop.
For Short position:
- MACD is making a divergence. The bar, where is approached lowest point between to minimums is called signal bar.
- We go short when price breaks the lowest value of signal bar. We place stop 5 pips below the signal bar
- When market is going down, we moved stop at some following local low or areas with consolidation
- We close our position when MACD crosses zero line or if price triggers our stop.
