MACD Trading Strategy

The MACD indicator is an oscillator which is commonly used by traders in trading. It is composed of the histogram and the signal line.

The indicator functions in different ways depending on the way a trader uses it. It can be used as an oscillator to start looking for buy signals when the histogram and signal are below the 0 line in an extended way, and when the histogram and signal line is above the 0 line in an extended way we start looking for sell trades.

The MACD can be used to spot divergence on the chart when price and indicator are moving in contrary manners.

Also when the MACD histogram crosses above the signal line it signals a buy and when the histogram crosses below the signal then its a sell signal, note that this is not necessarily a confirmation to trade.

When the histogram cross above 0 level it signal buy and when MACD histogram cross below 0 level it signal a sell.

 

MACD MTF DIVERGENCE STRATEGY

Buy Condition

When the MACD is above 0 level on the daily time frame (HTF), look for divergence on 1H time frame (LTF) and enter a buy trade when the histogram crosses the signal line, use the swing low as the SL and hold the trade till MACD histogram crosses below signal line.

Sell condition

When the MACD is below 0 level on the Higher Time Frame, look for divergence on Lower time frame(LTF) and enter a sell trade when the histogram crosses the signal line, use the swing high as the SL and hold the trade till MACD histogram crosses below signal line.

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