MACD
Developed by Gerald Appel,
The Moving Average Convergence/Divergence is one of the simplest, reliable, and most oftenly used indicators.
It is a momentum oscillator & also a trend-following indicator.
Construction
The construction of this indicator calculates the difference between 2 moving averages & then plots that as 'Fast' line: a second 'Signal' line is then calculated from the resulting 'Fast' line and then drawn on the same panel window as 'Fast' line.
- 'Fast' line - Blue Line
- 'Signal' line– Red Line
The 'standard' MACD values for 'Fast' line is a 12-period exponential moving average & a 26-period exponential moving average & a 9-period exponential moving applied to the fast line, this plots 'Signal' line.
- Fast-line = difference between 12 & 26 exponential moving averages
- Signal Line = moving average of this difference of 9-periods
Silver Trading Analysis & Generating Trading Signals
The MACD is oftenly used as a trend-following indicator & works most effectively when interpreting trending market movements. 3 common methods of using MACD to generate signals are:
Silver Trading Crossovers XAGUSD Trading Signals:
Fast-line/Signal Line Crossover:
- A buy silver signal is generated when the Fast line crosses above the Signal line
- A sell silver signal is generated when the Fast line crosses below the Signal line.
However, in a strong trending market this silver signal gives a lot of whipsaws, the best cross over to use would thus be the Zero Line Crossover Signal that is less prone to whipsaws.
Zero Line Crossover Signals:
- When the FastLine crosses above the zero center line a buy xagusd trade signal is generated.
- when the FastLine crosses below the zero center-line a sell xagusd trade signal is generated.
Divergence Silver Trading:
Looking for divergences between the MACD and xagusd price can prove to be very effective in identifying potential reversal &/or silver trend continuation points in xagusd price movement. There 2 types of divergences:
- Classic Divergence Trading Signals
- Hidden Divergence Signals
Overbought/Oversold Conditions:
MACD indicator is also used to identify potential overbought/oversold conditions in xagusd price action movements.
These levels are generated if the shorter MACD Lines separate dramatically from the median, this is an indication that xagusd price action is over-extending & it will soon return to more realistic levels.
MACD & Moving Average Silver Trading Crossover XAGUSD Trading System
This silver technical indicator can be combined with others to form a xagusd system. A good combination with the Moving Average crossover system. A trading signal is generated when both give a signal in same direction.
Technical Analysis in Silver Trading
