Moving Average Convergence Divergence (MACD)
factor.formula
Difference value (DIF):
Signal cable (DEA):
MACD Histogram:
in:
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The length of the time window of the fast EMA indicates the number of historical data periods used to calculate the fast exponential moving average. Usually set to 12, this parameter determines the sensitivity of the fast line to recent price changes. A smaller value means more sensitivity to price changes.
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The time window length of the slow EMA indicates the number of historical data periods used to calculate the slow exponential moving average. Usually set to 26, this parameter determines the sensitivity of the slow line to price changes. A larger value means that it is relatively insensitive to price changes and mainly reflects long-term trends.
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The length of the time window for DEA smoothing indicates the number of historical data cycles used to smooth the DIF value. Usually set to 9, this parameter determines the sensitivity of the DEA line to DIF changes. A smaller value means more sensitivity to DIF changes.
factor.explanation
The MACD indicator analyzes price momentum by calculating the difference (DIF) between the fast and slow exponential moving averages (EMA) and smoothing the difference (DEA).
Specifically:
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Difference (DIF): The DIF line is the difference between the fast EMA and the slow EMA, which reflects the difference between short-term and long-term price trends. DIF crossing the zero axis upward is considered a potential buy signal, and vice versa, crossing the zero axis downward is a potential sell signal. The change in the DIF value represents the change in the strength of the short-term trend relative to the long-term trend.
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Signal line (DEA): The DEA line is the result of smoothing the DIF value, and it is usually used as the signal line of the DIF line. When the DIF line crosses the DEA line, it is usually considered a buy signal; when the DIF line crosses the DEA line, it is considered a sell signal. The DEA line can reduce the false signals of the DIF line and provide more stable trading signals.
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Histogram (MACD Histogram): The histogram is the difference between the DIF line and the DEA line, and is multiplied by 2 to magnify it, which is used to observe the crossover and divergence of the DIF line and the DEA line more clearly. The positive and negative values and size changes of the histogram can help traders judge the changes in price momentum. When the histogram changes from negative to positive, it means that the price momentum is increasing, which may form a buying opportunity; when the histogram changes from positive to negative, it means that the price momentum is weakening, which may form a selling opportunity.
Trading signals of MACD:
- Golden Cross: When the DIF line crosses the DEA line from bottom to top, it is called a golden cross, which is usually regarded as a buying signal.
- Dead Cross: When the DIF line crosses the DEA line from top to bottom, it is called a dead cross, which is usually regarded as a selling signal.
- Zero Axis Crossing: When the DIF line crosses the zero axis, it can be regarded as a stronger trend confirmation signal.
- Top Divergence: When the price hits a new high, but the MACD indicator does not hit a new high, it may indicate that the trend is about to reverse.
- Bottom divergence: When the price hits a new low, but the MACD indicator does not hit a new low, it may indicate that the trend is about to reverse.
Important Tips: The MACD indicator is a lagging indicator and cannot be used alone. In actual application, it is necessary to combine other technical indicators and fundamental analysis for comprehensive judgment and risk management.