Comment on Indicators (Part 2)

sammandar khan commented on 06 Jan 2017, 02:46 PM

The sentiment is bullish when the 9 day SMA crosses over the MACD Line wherein the 9 day SMA is greater than the MACD line. When this happens, the trader should look at buying opportunities
The sentiment is bearish when the 9 day SMA crosses over the MACD line wherein the 9 day SMA is lesser than the MACD line. When this happens, the trader should look at selling opportunities

The chart below plots the MACD indicator on Asian Paints Limited. You can see the MACD indicator below the price chart.

M2-Ch15-Chart2

The indicator uses standard parameters of MACD:

12 day EMA of closing prices
26 day EMA of closing prices
MACD line (12D EMA – 26D EMA) represented by the black line
9 day SMA of the MACD line represented by the red line

The vertical lines on the chart highlight the crossover points on the chart where a signal to either buy or sell has originated.

For example, the first vertical line starting from left points to a crossover where the MACD signal (9 day SMA) lies below the MACD line and hence one should look for a selling opportunity. The 2nd vertical line from left, points to a crossover where the MACD signal line lies above the MACD line, hence one should look at buying opportunity.

Sir I have just doubt while understanding the chart and theory together as you wrote the 9 day SMA(red line) is greater than MACD line(black line) then it is a buying signal where in the chart the red line is greater from black line where it is showing sell signal.
What is the exact thing can you please clear?

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