MACD Indicator: The 'King of Indicators' everyone in the cryptocurrency market must learn!
Brothers, the cryptocurrency market is changing rapidly, learning the MACD indicator will make your efforts more effective! MACD (Moving Average Convergence Divergence) is known as the 'King of Indicators'.
Simple and easy to use, applicable to daily, 4-hour, and even minute charts, a must-have for cryptocurrency players! With real-time data from BTC and altcoins, I will help you get started quickly and reveal advanced methods, fully packed with useful information!
MACD Basic Analysis: Understanding Trends with Three Lines
MACD consists of three parts
Fast Line (White Line): Short-term EMA (usually 12-day), intensifies volatility, reacts quickly.
Slow Line (Yellow Line): Long-term EMA (usually 26-day), experiences slower volatility, represents the trend.
Zero Line (Red and Green Histogram): The difference between the fast line and the slow line, the length of the histogram reflects trend strength.
Core Uses:
Golden Cross: The white line (fast line) crosses above the yellow line (slow line), indicating a bullish signal!
Death Cross: The white line crosses below the yellow line, indicating a bearish signal!
The Secret of the Zero Line:
Above the Zero Line: Golden cross shows strong bullishness, the trend is bullish; death cross shows weak bearishness, may just be a correction.
Below the Zero Line: Death cross shows strong bearishness, bears dominate; golden cross shows weak bullishness, may just be a rebound.
Crossing the Zero Line: If the fast line breaks below the zero line after a death cross, the bearish momentum strengthens (like BTC falling from 90,000 to 75,000 last December); if it breaks above the zero line after a golden cross, bullish momentum erupts.
Advanced Technique: Divergence Signal
The real killer move of MACD is divergence, which can capture opportunities in advance!
Top Divergence: Price makes a new high, but the fast line fails to make a new high, while the MACD histogram shortens, leading to a release of upward momentum and potential decline.
Bottom Divergence: Price makes a new low, but the fast line fails to make a new low, while the MACD histogram lengthens, releasing downward momentum and potential rebound.
Alright, that's it for today, a little attention please.