How to read the MACD indicator! Do you know the MACD indicator yet?
MACD was developed by Gerald Appel in the late 1970s. This indicator belongs to the category of lagging indicators, which means that it reacts based on prices or data in the past.
Well, this indicator really works for those of you who want to know the momentum of the price trend, and want to see the average movement of the chart! Not only that, this indicator can also be used to see price deviations, you know! So, when the price trend diverges, you can know when it’s time to sell or buy crypto assets. Anyway, this indicator is really suitable for those of you who do scalping, day trading, and swing trading!
Advantages of MACD indicator
The advantages of the MACD indicator are… First, the signals generated by this indicator are easy and can be entered into any trading system. Second, this indicator identifies to the market the different phases of the impulse and correction to occur. Third, if you use the MACD indicator, you can also identify the momentum of the market state. Fourth, the MACD indicator offers input signals, you know, for its users! And, the last advantage is that this indicator is a reaction indicator!
Disadvantages of MACD Indicator
This MACD is for those of you who like to lose track of time, so you have to be careful! Why? Because, the use of this MACD indicator must focus and timeliness of the signal. In addition, this indicator also does not identify time intervals and does not correctly identify the time of market trend reversal. So, it is recommended for your analysis to be able to combine between and signals from signals, yes!
The MACD is generated by the way you subtract two exponential moving averages or EMAs to create a main line or MACD line, which is then used to calculate another EMA that represents the signal line. Or, you can also calculate it with the MACD histogram, which is calculated based on the difference between the two lines. The histogram, along with the other two lines, fluctuates above and below the center line, which is also known as the zero line.
How to read MACD indicator
- First, open the crypto asset that you want to see the graph for. Nadia gave an example, for example Bitcoin. For that, we first open the Bitcoin crypto asset, then click “Advance Chart” in the column above. After that, a graph of the price movement of the Bitcoin crypto asset will appear.
- Second, click the logo that makes up the “Indicators”. Well, here there are a lot of various indicators, but this time we will first discuss the MACD indicator. So, all you have to do is search or just type “MACD”. Finished! Found it, right?
- Next, after you click “MACD”, the chart will form the MACD indicator chart. Has the MACD indicator appeared? If so, don’t forget to zoom in on the MACD with the “ZOOM IN” icon next to the graphic, with the magnifying glass logo on it, you know! After that, just keep zooming in and you can see the MACD chart clearly and in detail!
Take a look at this graph, there are vertical graphs and lines that go up and down. If you see there are two different colors, namely the blue and red lines. Don’t worry, you don’t have to worry about these warning lines and colors, it’s simple!
So, the red line indicates when is a good time for you to enter the market or simply when is the best time for you to buy or sell crypto assets. Meanwhile, the blue line indicates ongoing transaction activities. So, it can be seen that the market estimates make transactions at the top price or at the bottom price.
Reading MACD technical indicator
So, if you want to buy a crypto asset, buy the time when the line is down or the price is going down. Now, take a look at your charts! If the blue and red lines cross, it means it’s time for you to buy crypto assets. Because, if there is a deviation like Nadia gave a circle on this chart, it means the price will go up in the long term. Just notice, the line keeps going up after crossing.
If the blue line is further than the red line, this is a good sign! That means the price will go up even higher. It’s not always accurate when the MACD line and the line cross or intersect, but usually this event is considered a signal to reverse the trend. Especially, if the MACD chart is far above or well below the zero line.
So, when is the best time to sell crypto assets?
The answer is yes when prices go up!
But, if you want to sell your crypto assets when the blue line moves away from the red line, that’s totally fine too, you know! Or, if you want to be patient and play it safe, you can wait until the intersection goes down! If the price really wants to go down, you will find a crossing line as a sign it’s time to sell! Remember, the lines must first stick and intersect!
You also have to pay attention to the red vertical lines on the chart!
If the line starts to decline and has started to go below and not above, it is a sign that the transaction has started to go down and could be a sign that the price will continue to fall down.
When the MACD line crosses above the midline, the MACD value will be positive, which means that the upward momentum of the crypto asset price is stronger. If the red and blue lines are far apart, especially below, according to Nadia, it is not recommended to buy or sell your crypto assets! So, just be patient! Hehehe.
REMEMBER! In using this MACD indicator, you have to be diligent in zooming in on the chart and have to look closely! Don’t read the chart from afar! This is so that you don’t see the wrong sign from the blue line and red line.
Already understand the MACD indicator, right? If you feel that this indicator is suitable for you, you can use this MACD indicator to help trade your crypto assets! However, if you don’t think it’s suitable, there are still many analytical indicators that you can use for trading.