MACD: The moving average convergence divergence (MACD) is a type of oscillating indicator that can help traders quickly spot increasing short-term momentum.
An oscillating indicator is a technical analysis indicator that varies over time within a band (above and below a centreline; the MACD fluctuates above and below zero. It is both a trend-following and momentum indicator.
One basic MACD strategy is to look at which side of zero the MACD lines are on in the histogram. If the MACD lines are above zero for a sustained period of time, the stock is likely trending upwards. Conversely, if the MACD lines are below zero for a sustained period of time, the trend is likely down. Using this strategy, potential buy signals occur when the MACD moves above zero, and potential sell signals when it crosses below zero.
Signal line crossovers can also provide additional buy and sell signals. A MACD has two lines—a fast line and a slow line. A buy signal occurs when the fast line crosses through and above the slow line. A sell signal occurs when the fast line crosses through and below the slow line.
Pattern name: Strategy name
Time interval: Candlestick or bar Timeframe
Signal Direction: Bullish or Bearish
MACD: Oscillating Trading Indicator
Index: Choose one of the three components of the MACD indicator – MACD Line, Signal Line or MACD Histogram.
1. Break: When MACD Line, Signal Line or MACD Histogram surpass certain level on the MACD indicator. In this instance, only one stock can be selected.
2. Cross: When two indicator components are crossing. For cross strategy an additional component has to be selected.
Effect: Select “Below to Above” ,“Above to Below” or Touch. The index functions -Below/Above- in coordination with Second index or Target level.
Target Level: MACD component level (MACD Line, Signal Line, MACD histogram)
Target Symbol: Add target symbol . For Break method only one symbol can be selected.
Time Scope: Timeline for the strategy
“Create and save” or “Create and Add New Indicator”: Select “Create and Save” if building a strategy with one indicator, or select “Create and Add New Indicator” if adding an additional indicator to the strategy.