MACD Simplified Interpretation:
As in the case of MACD, it is possible to use this indicator in 2 different ways:
A buy opportunity appears when the MACD crosses above its signal line. A sell opportunity appears when the MACD crosses bellow its signal line. The divergence between the MACD histogram and the price quote identifies major reversal points and gives strong buy or sell signals.
A bearish divergence occurs when the stock price makes new highs while the MACD histogram fails to make new highs. A bullish divergence occurs when the stock price makes new lows while the MACD histogram fails to make new lows. The bullish and bearish divergences are more significant when the MACD is in overbought or oversold levels.
The opportunities that appear in longer time horizons, such as weekly and monthly, generate larger price movements.
MACD Simplified Calculation:
In the basic MACD you could specify some numbers for the Moving Average. The MACD Simplified use the first formula with some % and not some periods. To calculate we have two Moving Averages with 12.333 and 25.666 as period. %=(period+1) and 15%=2/(12.333+1) and 7.5%=2/(25.666+1)
Return from MACD Simplified to Using Indicators