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Chapter 8. Advanced Moving Average Convergence-Divergence (MACD): The Ultima...

Chapter 8. Advanced Moving Average Convergence-Divergence (MACD): The Ultimate Market Timing Indicator?

The Moving Average Convergence-Divergence (MACD) timing model, which I invented during the late 1970s, has become one of the most popular of technical tools, used by short- and longer-term investors in the stock, bond, and other investment markets. It is a featured indicator on virtually every computer-based technical trading program and trading platform.

MACD is an indicator for all seasons. If monthly data is maintained, MACD can be used in the analysis of longer-term trends. It can be applied to somewhat shorter time periods, reflected perhaps by weekly or daily data, in the analysis of intermediate- and shorter-term market trends. It can be applied on an intraday basis for time frames as short as hours or minutes, which makes it suitable for short-term day-trading purposes. The indicator is frequently capable of producing precise entry and exit signals: One of its strongest features is its ability to detect the conclusions of and favorable market entry junctures following serious intermediate market declines.


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