The Moving Average Convergence Divergence: A divergent average - converging an indicator that integrates all technical analysis software. Investors use it for free.
So today I will show you how to use this indicator, as well as pros and cons of this indicator.

Usage and function of MACD

MACD is made up of 2 lines (MACD and Signal) and histogram, often used with the default cycle of 12, 26, 9. This parameter can be customized to be more suitable for each individual.
- MACD: Purple line.
- Signal: Blue line.
- Histogram range: In the background of the chart. Histogram = (MACD Line) - (Signal Line).
The lines on you learn about how to calculate, here I do not write anymore. Basically you don't need to care and so do I. I just care about how it is used and its functions.
Some investors can use the MACD signal to trade. Buy / sell according to the intersection signals of 2 MACD and Signal lines. But even the name of this indicator shows that the main function here is divergence and convergence in long-term transactions.

Trading method

So what is the method of trading on this index? There will usually be 2 main trading methods as follows:
Method 1: Trading to buy / sell based on the intersection of 2 MACD and Signal lines.
- Buy (Buy): When the MACD and Signal lines intersect, the MACD line is above the Signal line.
- Sell (Sell): When the MACD and Signal lines intersect, the MACD line is below the Signal line.

Method 2: Divergence and support - the peak of long-term transactions.
This is a function that is often of interest to long-term investors, more specifically, it has almost the same catch / peak in the long term.

The cycle of price reversal increases - Increasing divergence: When there is this signal, it is likely that the market will reverse the price increase in a long time, formed as follows:

The characteristics of identification and necessary conditions for this signal are as follows:
- Before that was a discount.
- On the price line, there are 2 bottoms, the bottom (bottom 2) is lower than the previous bottom (bottom 1). At the same time, MACD also created 2 troughs.
- On MACD, it created 2 troughs and the bottom bottom (bottom 2) is higher than the previous bottom (bottom 1).
- There are no other bottoms between these two bottoms.
==> Trading: After having the above signal and completing the bottom 2, investors will enter the trading order at the second bottom (the bottom).

The price reversal cycle - Divergence divergence: When there is this signal, it is likely that the market will reverse price reduction in a long time, formed as follows:

The characteristics of identification and necessary conditions for this signal are as follows:
- Before that was a price increase.
- On the price line, there are 2 peaks, the next peak (peak 2) is higher than the previous peak (peak 1). At the same time, MACD also created 2 peaks.
- On MACD, it creates 2 peaks and the next peak (peak 2) is lower than the previous peak (peak 1).
- Between these two peaks there are no other vertices.
==> Trading: After having the above signal and completing the second peak, investors will enter the trading order at the second peak (the next peak).

Advantages and disadvantages of this index

MACD is used a lot, has the highest utilization rate in other indicators via survey results on some websites. But the main purpose of this index is to find divergence for long-term trading. The second method is the main method of this index.

- Advantages:
+ Suitable for transactions with large time frames from H4 or more. The smaller the time frame, the greater the signal noise level.
+ It is applicable for trading almost all currency pairs, foreign currencies as well as securities.
+ Apply for trading in the long term.
+ When there is divergence - convergence, this is almost the peak / bottom of the market.
+ ..... Investor verifies more ...!

- Defect:
+ Very few signals to trade. Rarely seen as this divergence.
+ There will be time periods with no entry points.
+ .... in the process of applying investors to self-verify more ....!

There are also many other advantages and disadvantages. Trading methods based on basic technical analysis, please search this website immediately to find out more.

Here I only guide the main of this index so that investors can bring the best profit possible. In addition, investors can read other methods, and learn more about other methods on this website.