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MACD Indicator Trading Strategy
A positional trading strategy using MACD (with example) ā
Hey there šš¼
In todayās edition, weāll talk about an indicator that is created by combining 2 types of moving averages - the MACD.
Read on to learn how the indicator is constructed & how it can be used for an effective positional trading strategy.

What is MACD?
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a stockās price.
The āMACD lineā is the difference between a stockās 26-day and 12-day exponential moving averages (EMA). A 9-period EMA of the MACD line is also plotted, known as the āsignal lineā. It can be interpreted as follows:
A buy signal is generated when the MACD line crosses above the signal line.
A sell signal is generated when the MACD line crosses below the signal line.

Using MACD for Positional Trading
Combining the MACD with RSI and a 20-period EMA creates a good positional trading strategy, guided by the following rules ā¬ļø
Entering a TradeAn entry is triggered when the following conditions are met on a weekly or monthly timeframe: > The price should be above the 20-period EMA, and the EMA should preferably be acting as a support > A bullish MACD crossover should be seen > The RSI should be crossing over/above 50 | Booking ProfitsConversely, a position can be exited when the following conditions are seen: > The price should be below the 20-period EMA, and the EMA should preferably be acting as a resistance > A bearish MACD crossover should be seen > The RSI should be crossing under/below 50 |
Itās prudent to look for bullish/bearish candlestick patterns as a confirmation along with the above signals before entering/exiting a trade.

Example - Positional Trade in M&M
You can see how in the following chart, the price is above the 20-period EMA, a bullish MACD crossover is seen (highlighted in orange), and the RSI has crossed above 50 (pointed with purple arrow).
A bullish engulfing pattern forming after a few consolidating doji candles (highlighted in blue) confirms an entry for a fresh uptrend ā¬ļø


Learn various indicators & effective strategies in Mr. Khagesh Agarwalās Momentum Trading Course.
Use āSTOCK10ā for a 10% discount & get the course for just ā¹359

Happy learning,
Upsurge.club
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