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    Technical Analysis MACD

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    YashovardhanKanodia
    The document discusses the Moving Average Convergence Divergence (MACD) technical indicator. It explains that MACD is calculated using short and long term exponential moving averages to identify trends and signals in stock price movements. It provides details on how MACD is calculated and how to interpret buy and sell signals from MACD line crossovers.

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    Technical Analysis MACD

    Uploaded by

    YashovardhanKanodia
    38 views2 pages
    The document discusses the Moving Average Convergence Divergence (MACD) technical indicator. It explains that MACD is calculated using short and long term exponential moving averages to identify trends and signals in stock price movements. It provides details on how MACD is calculated and how to interpret buy and sell signals from MACD line crossovers.

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    The document discusses the Moving Average Convergence Divergence (MACD) technical indicator. It explains that MACD is calculated using short and long term exponential moving averages to identify trends and signals in stock price movements. It provides details on how MACD is calculated and how to interpret buy and sell signals from MACD line crossovers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    38 views2 pages

    Technical Analysis MACD

    Uploaded by

    YashovardhanKanodia
    The document discusses the Moving Average Convergence Divergence (MACD) technical indicator. It explains that MACD is calculated using short and long term exponential moving averages to identify trends and signals in stock price movements. It provides details on how MACD is calculated and how to interpret buy and sell signals from MACD line crossovers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    www.plindia.com | www.majorgainz.

    com

    KNOWLEDGE

    CENTRE

    Technical Analysis -

    MACD

    What is technical analysis?


    Technical analysis is a method of forecasting the future movement of share prices by studying past
    market activity like prices and volumes, using charts and other financial tools. Technical analysis follows
    the philosophy that past market activity indicates future market activity. There are several benefits of using
    technical analysis. The most important is that it focuses on price movement, so the necessary data is
    easily available. Trends and patterns are easily identifiable. The Relative Strength Index (RSI), the Moving
    Average Convergence Divergence (MACD) and the Stochastic Oscillator are popular tools of technical
    analysis.

    What is MACD?
    MACD is Technical Analysis indicator that was developed by Gerald Appel in 1970 to spot changes in
    stock movement and the underlying trend. It is a collection of three signals that are calculated from the
    historical prices of the stock namely the MACD line, the Signal Line and the Divergence. It is broadly a
    momentum indicator that shows the relationship between two moving averages of price i.e MACD is
    calculated taking into account the difference between a short term Exponential Moving Average (12 days)
    of a stock and longer term Exponential Moving Average (26 days) of the stock against the Signal Line
    which shows the 9 day Exponential Moving Average.

    How is MACD calculated?


    An MACD chart consists of a two coloured lines the MACD line and the MACD Signal line. The MACD
    line is calculated by by following this process 1. Calculate a 12 day EMA of closing prices
    2. Calculate a 26 day EMA of closing prices
    3. Subtract the longer EMA in (2) from the shorter EMA in (1)
    The the MACD Signal line is calculated by taking the 9 day exponential moving average of the stock.

    www.plindia.com | www.majorgainz.com

    KNOWLEDGE

    CENTRE

    How to use MACD to trade?


    When the MACD line i.e Red Line falls below the Signal Line, it indicates a bearish signal and is taken as
    an indication to Sell. When the MACD line goes above the Signal line, it indicates a bullish signal and is
    an indicator to Buy. The crossovers between the lines point to a divergence that would eventually
    converge helping the trader predict the direction of the price movement.

    Karan Chimandas Kripalani


    +91 22 66322298
    [email protected]

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