|Most Volatile Share||Rate of Change (ROC)||Beta Stocks||Chaikin Money Flow (CMF)|
|Average Directional Index (ADX)||Accumulation Distribution Index (ADI)||On Balance Volume (OBV)||Bollinger Band|
|MACD||Volume||Pivot Point||Moving Average basics|
MACD stands for Moving Average Convergence and Divergence. MACD is a calculated by subtracting fast Exponential Moving Average and a Slow Exponential Moving Average. These average moves towards and away from each other and hence the name was given as Moving Average Convergence and Divergence. Mr. Gerald Appel invented MACD in the late 1970s. MACD is so popular because it is one of the most reliable and easy to use technical indicator. Even though it is lagging indicator, it provides signal before moving average cross over. MACD gives signal for trend continuation and reversal therefore used both by bulls and bears. Though MACD calculation may be difficult and time consuming but most of the common charting package and stock analysis site provides it.
There are three different indicators in MACD that provides signal to technical analyst. They are:
1. MACD and signal line crossover. When MACD line moves above Signal line a Buy signal is generated. Aggressive traders may jump at this point. This is easy to spot and its occurrence is also quite common but decision based alone on this indicator may lead to losses. This signal should be verified by other indicators. If after this indicator if MACD crosses above zero line then it's reliability is considered better.
2. MACD moving above zero line. When MACD line crosses above zero line buy signal is generated. This is equivalent of 12 day EMA crosses above 26 EMA. Reliability of this is better than MACD and signal line cross over.
3. MACD and price divergence. When price is making higher highs and higher lows and MACD is making lower highs and lower lows, a trend reversal is generated. This is one of the rarest signal spotted of all MACD signal. MACD price divergence is one of the most reliable signals.
1. Exponential Moving averages used by TopStockResearch are 12, 26.
2. Colors which represents MACD are: Blue is for MACD. Red is for signal line. Green for MACD Histogram. Grey for MACD zero line.