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 Cross-overs XAGUSD Trading Signals:

Fast-line/Signal Line Crossover:

• A buy signal is generated when the Fast line crosses above the Signal line
• A sell signal is generated when the Fast line crosses below the Signal line.

However, in a strong trending market this 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 price can prove to be very effective in identifying potential reversal &/or trend continuation points in price movement. There 2 types of divergences:

1. Classic Divergence Trading Signals
2. Hidden Divergence Signals

Overbought/Oversold Conditions:

MACD indicator is also used to identify potential overbought/oversold conditions in 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 Cross-over XAGUSD Strategy

This 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