What is the MACD indicator? The MACD indicator was proposed by Gerald Appel in 1979 and is mainly used to analyze the intensity of stock price changes, the conversion of direction, and changes in momentum. It uses the convergence and divergence between the short-term exponential moving average and the long-term exponential moving average to conduct technical analysis on buying and selling opportunities. The short-term exponential moving average is called the fast line, generally using a 12-day moving average; the long-term exponential moving average is called the slow line, generally using a 26-day moving average. If the price keeps making new lows while the fast and slow lines of the MACD indicator do not make new lows, this situation is called a bottom divergence. If the price keeps making new highs while the fast and slow lines of the MACD indicator do not make new highs, this situation is called a top divergence.
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Talking through the picture: (The red bars marked in the image represent an increase, while the green bars represent a decrease) The MACD indicator not only includes the fast and slow lines but also red and green bars. When red bars appear in the MACD indicator, it indicates that the market may strengthen, that is, it will rise. When the market continues to rise, the red bars in the MACD indicator will gradually lengthen. The elongation of the basic red bars is synchronized with the rise of the market. Conversely, if green bars appear in the MACD indicator, it means that the market begins to weaken or starts to decline; the greater the decline, the longer the green bars will become. If the market continues to rise or fall, but the red or green bars do not continue to lengthen, then a divergence phenomenon in the MACD indicator occurs. MACD divergence is also one of the important characteristics at the end of the market. Here, I remind everyone that if encountering a one-sided market, various auxiliary indicators will become ineffective. At this time, we should use the main chart indicators to track the market.
