Sunday, August 21, 2011

MACD oscillator bullish divergence


In the example above, the yellow area shows the MACD in negative territory as the 12-day EMA trades under 26-day EMA. The initial cross came at the end of September (black arrow) and MACD moved further into negative territory as the 12-day EMA EMA diverged beyond 26 days. The orange area highlights the period of positive MACD, which is when the 12-day EMA is above 26 day EMA. Note that the MACD remained below 1 during this period (red dotted line). This means that the distance between 12-day EMA and 26 day EMA is less than 1 point, which is not much difference.


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