Understanding The MACD Divergence Convergence Trading Strategy
Understanding MACD convergence divergence (often referred to as the MACD Crossover, although that is an altogether different trading strategy)is an easy, useful, consistent trading strategy to learn; especially for new traders who want to learn Swing Trading.
When the price makes a lower low, while at the same time the MACD is making a higher low — this is what’s referred to as bullish divergence.
Conversely, if the MACD makes a lower high and the price makes a higher high — this would be considered bearish divergence.
Divergence, either bullish or bearish, almost always happens right after a sharp price movement in the asset you’re charting.
At it’s core, divergence is a strong sign that the price is about to reverse. One way you can determine if a reversal is imminent, is to watch and wait to see if the move is followed by a trendline break. This is the biggest part of the moves confirmation.
Now that you have a decent confirmation, the hardest part is over.
Next, you need to to a few more things in order to maximize your chances of success and secure your potential profits. Now that you have confirmation, you Continue Reading…