Chart Analysis Series: MACD – The Core Indicator for Anticipating Entry Timing

Welcome back to the Chart Analysis series. This guide will help you gradually master technical indicators and chart patterns like a professional trader. The previous article explored two basic technical indicators used to determine trend direction: SMA (Simple Moving Average) and EMA (Exponential Moving Average). Now, we will discuss the "Momentum Indicator," which helps you anticipate trend changes before price movements occur. Introducing: MACD (Moving Average Convergence Divergence) What is MACD? MACD stands for "Moving Average Convergence Divergence." Simply put, MACD is a momentum indicator used to assess the strength of price changes. In other words, it helps us understand: "Is the market about to change?" Moving averages help you determine market trends, while MACD reveals the strength of those trends. It is one of the fastest ways to capture trend reversals before price changes. MACD consists of three components: 1. MACD Line (Blue) Think of it as your momentum tracker. It reacts when price trends begin to reverse, showing whether the market's energy is increasing or slowing down. 2. Signal Line (Orange) This line closely follows the MACD line. When the blue line crosses above the orange line, it usually indicates strengthening momentum (buy signal). When the blue line crosses below the orange line, it may indicate weakening momentum (sell signal). 3. Histogram (Red or Green bars) These bars display the distance between the blue and orange lines. Interpretation: Increasing bars = Strengthening momentum Decreasing bars = Weakening momentum Green bars = Bullish energy (strong buyer demand) Red bars =...

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