Better MACD

What is the MACD?
The MACD (Moving Average Convergence Divergence) is a momentum and trend-following indicator. It’s based on the difference between two EMAs (Exponential Moving Averages) and helps spot:

Trend direction

Momentum shifts

Reversals

Entry/exit points

✅ Basic MACD Techniques
1. Signal Line Crossovers
Bullish Crossover: MACD line crosses above Signal → buy signal

Bearish Crossover: MACD line crosses below Signal → sell signal

🔸 Works best in trending environments, 200 SMA as a filter.
🔸 Combine with volume or trend filters for best results

2. Zero Line Crossovers
When MACD crosses above 0, the shorter EMA is above the longer EMA → bullish. This is typically the sign of a larger trend than crossovers.

When MACD crosses below 0, shorter EMA is below → bearish

🔸 Zero line = baseline momentum direction
🔸 Cross above = bullish trend confirmation
🔸 Cross below = bearish confirmation

3. Histogram Momentum
The histogram is often the first sign of a shift before a crossover happens.

Read it like this:
Histogram growing: Increasing momentum in that direction

Histogram shrinking: Momentum is fading

Histogram changing color (in many indicators): Potential reversal

🔸 Use histograms to get early signals, even before crossovers. Confirmed with volume surge and Price Action.

🔍 Advanced MACD Tricks
📉 4. Divergence Detection
Divergence occurs when price and MACD move in opposite directions.

🔸 Bullish Divergence:
Price makes lower lows

MACD makes higher lows

→ Hidden buying pressure, trend reversal likely

🔸 Bearish Divergence:
Price makes higher highs

MACD makes lower highs

→ Trend weakening, reversal likely

🔹 Confirm with:

RSI, when the lower timeframe RSI is oversold and the higher timeframe MACD is rising, then it's a good sign, and the opposite is true for bears.

Support/resistance zone: draw trendlines either on the volume or price and watch out for retests on the breakout.

Candlestick reversal patterns: some bearish patterns are bullish on indexes because of dollar cost averaging.