I once thought I was an undaunted captain in the sea of cryptocurrencies until that '312 black swan' caused me to sink. A position of 12000000 was wiped out in half an hour, and the cold touch of the phone screen is still unforgettable.

But despair is often the catalyst for wisdom, leading to a sudden realization: the essence of contracts is probabilistic games. With the remaining 800000 capital, combined with 'movement

The state hedge model, in February this year, achieved an asset leap to 2.18 million in 60 days, an increase of 272900%!

Now, I will freely share this 'MACD strategy' — in the cryptocurrency world, learning to dance with risk is the true way to survive.

In addition to solid MACD skills, I strictly follow the six iron laws of the cryptocurrency world:

First rule: Quick rises and slow falls indicate the market is eating up.

A sharp rise followed by a slow decline is mostly a wash, don't panic and run. A true top is defined by a sudden surge in volume followed by an immediate drop, that’s the bait.

Second rule: Quick drops and slow rises indicate the market is slowly rebounding after a flash crash caused by a large player unloading, not a bargain hunt, but rather the final blow. Don't hold the illusion of 'can it still drop after falling so much?'

Third rule: Volume at the top doesn't necessarily mean it's over; lack of volume is the real danger.

If there is volume at a high level, it may surge; if there is dead silence with no volume at a high level, that's the true eve of a crash.

Fourth rule: Volume at the bottom, don’t be impulsive; continuity is reliable.

A single surge in volume may be bait. Continuous days of surging volume after a period of shrinking volume is the real signal for building positions.

Fifth rule: Trading cryptocurrencies is trading emotions; emotions are hidden in 'volume'.

The candlestick is the result, while the trading volume is the thermometer of emotions. Shrinking volume means no one is playing; surging volume means funds are flooding in.

Sixth rule: 'Nothing' is the ultimate state.

No obsession, dare to hold cash; no greed, don't chase highs; no fear, dare to buy the dip. It's not about being Zen, it's about having a top-level trading mentality.

In this article, we will explain the role of the MACD indicator, how it helps you analyze prices, and how to use it in your own trading.

First, let's take a look at the various components of the MACD indicator:

✍ MACD line: The MACD line is the core of the indicator. It is the difference between the 12-period EMA and the 26-period EMA. This means that the MACD line is essentially a moving average crossover system.

✍ Signal line: The signal line is the 9-period EMA of the MACD line. Essentially, the signal line is just another moving average of the moving average.

✍ MACD histogram: The histogram is the difference between the MACD line and the signal line.

In this article, we primarily focus on the MACD line and the signal line. The histogram is derived from the other two components of the MACD, so its explanatory value for overall MACD trading is not as significant as the former two.

Basics of the MACD indicator

The MACD is based on moving averages, which means it is very suitable for analyzing momentum, finding entry points, and maintaining positions before the trend exhausts.

This article will focus on the two signals of the MACD and gradually explain how to use the MACD to look for trading opportunities:

1) The MACD line crosses the zero axis

The screenshot below shows the MACD line and signal line at the bottom of the chart. We have also plotted two moving averages (12 EMA and 26 EMA) on the chart.

This can help us immediately understand the mechanism of the MACD:

When the two EMAs on the price chart cross, the MACD line will also cross below the zero axis - we have marked the crossing point with x and a vertical line.

We can see that the MACD is exactly the same as the conventional moving average crossover system.

As we mentioned in the article on moving averages, the crossover of the two moving averages shows the change in momentum and often indicates the beginning of a new trend.

When the MACD line crosses the zero axis, it indicates that momentum is changing, and a new trend may be about to start.

2) The distance between the MACD lines

When the two lines of the MACD indicator separate, it means momentum is strengthening and the trend is becoming stronger.

When the two MACD lines are close together, it indicates that the price is losing strength.

In addition, we can use the zero axis as a criterion for determining trends:

✔ When the two MACD lines are above the zero axis, the price can be considered in an uptrend.

✔ When the two MACD lines are below the zero axis, the price is in a downtrend.

Trend-following strategy

During a consolidation range, the two lines of the MACD are usually very close and hover near the zero axis; this means the market has no momentum and no strength.

Let’s understand how the MACD helps us identify different market phases through the example in the figure below.

At point 1, the price fluctuates within a narrow range, while the two MACD lines are closely attached to the zero axis and continuously cross. When the price breaks through the range, the two MACD lines move away from the zero axis and separate from each other.

You can also draw trend lines or support/resistance lines directly on the MACD indicator. Breakouts of the MACD are another important momentum signal.

In the subsequent trend phase, the MACD line continues to stay above the zero axis, confirming the overall bullish sentiment. The moving averages on the price chart can effectively assist trend-following trades, helping you maintain positions until the moving averages are broken.

At point 3, the price enters a sideways consolidation phase. The MACD retraces to the zero axis during this consolidation. Subsequently, the breakout of the MACD line and price triggers the next phase of the trend.

In the trend phase (4), the MACD remains above the zero axis again. As long as the MACD is above the zero axis, the bullish trend remains valid.

At the top (5), the price hits a higher high, while the MACD hits a lower high. This is a typical divergence signal. Divergence indicates a weakening trend momentum and is a strong reversal pattern.

After divergence occurs, the price drops sharply, and the MACD first breaks below the zero axis. This marks the beginning of a new downward trend, and the MACD continues to stay below the zero axis.

MACD divergence as an early entry signal

MACD divergence is another excellent method for analyzing prices and looking for early trend-following trades.

In the chart below, the market initially experiences a strong upward trend, leading to a rapid rise in the MACD.

Subsequently, momentum changes, and the price only rises slowly with limited gains. The MACD begins to decline, indicating that momentum is changing.

When the price falls below two moving averages and is accompanied by strong selling, the MACD also begins to break below the zero axis. Such signals usually indicate that a larger decline may occur in the future.

Indicators can provide great assistance for trading as they offer objective and easy-to-interpret information. Especially for trend traders, the MACD is a very useful indicator because it effectively analyzes trends and momentum.

This is the trading experience that Yan An shared with everyone today. Many times, you lose many money-making opportunities due to your doubts. If you don't dare to boldly try, engage, and understand, how can you know the pros and cons? You will only know how to proceed after taking the first step. A cup of warm tea, a piece of advice, I am both a teacher and a friendly conversationalist.

Fate brings us together, and knowing each other brings separation. I firmly believe that if you are destined, you will meet no matter how far apart, and if you are not, you will pass by by chance. The path of investment is long, and temporary gains and losses are just the tip of the iceberg. One must know that even the wisest can have their misses, and even the least fortunate can have their gains. Regardless of emotions, time will not stop for you. Set aside your worries and stand up to move forward again.

The martial arts manual has been given to everyone; whether you can become famous in the world depends on yourself.

These methods must be saved; read them more than once. If you find them useful, please share them with more people trading cryptocurrencies around you. Follow me to learn more insights from the crypto world. After being rained on, I would hold an umbrella for the retail investors! Follow me, and together we will move forward on the crypto path!