Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

Submit Post
සිංහල පරිවර්තනය
Search
 
 

Display results as :
 

 


Rechercher Advanced Search

Latest topics

» Gold Price
by suku502 Yesterday at 9:25 pm

» COCR can be attractive
by suku502 Yesterday at 5:24 pm

» COMB.X is in support Level will hit 112 in coming weeks
by suku502 Yesterday at 5:22 pm

» PM TO BUILD 4000 BRIDGES ACROSS THE COUNTRY
by DS Wijesinghe Yesterday at 2:11 pm

» JINS Share Repurchase
by DS Wijesinghe Yesterday at 2:07 pm

» CHICKEN GETTING READY TO FLY!
by DS Wijesinghe Yesterday at 1:56 pm

» Wiser's TA Chart Room
by wiser Yesterday at 11:54 am

» LDEV / ELPL / UDPL Best Plantation results as of 31/12/17 ?
by glad Yesterday at 6:56 am

» What happened to Janashakhi.... I sold 2 weeks ago. Total gain i lost over 150000
by glad Yesterday at 6:52 am

» What to buy?
by Ryan Hudson Thu Feb 22, 2018 10:19 pm

» ALHP WILL MOVE UP SOON
by wisdom79 Thu Feb 22, 2018 6:23 pm

» Share my Portfolio gain to build morale and confidence over you !!!!
by wiser Thu Feb 22, 2018 4:00 pm

» Sri Lanka records BOP surplus of US$2.05bn in 2017
by DS Wijesinghe Thu Feb 22, 2018 2:06 pm

» Bus-explosion
by samaritan Thu Feb 22, 2018 1:09 pm

» SDB bank would be 120+
by hettdas Thu Feb 22, 2018 9:52 am

» Reason Behind SFS Booooming
by trasantha Thu Feb 22, 2018 8:21 am

» SL Rupee reaches record lows
by Sstar Wed Feb 21, 2018 11:05 pm

» Sri Lanka's ETI affiliate says no approval for investor yet
by Sstar Wed Feb 21, 2018 11:01 pm

» Winds of Change in Sri Lanka
by Sstar Wed Feb 21, 2018 10:55 pm

» Sri Lanka to introduce a new economic plan next week
by Sstar Wed Feb 21, 2018 10:53 pm

Forum Disclaimer

The information contained in this forum have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein.

www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever.

Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Charts & Graphs » Moving Average Convergence/Divergence Indicator

Moving Average Convergence/Divergence Indicator

Go down  Message [Page 1 of 1]

Quibit

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
[You must be registered and logged in to see this image.]
Commonly known as MACD, is an indicator that signals trend movements. This is a lagging indicator and can be used with other charts and patterns as a conformational tool. The MACD line is arrived at by subtracting a 26 day moving average from a 12 day moving average. A 9 day moving average of the difference between the 26 and 12 day moving averages is drawn as the signal line. This is the most common period used by analysts but other time periods could also be used.

BUY/SELL signal

The MACD is supposed to give BUY or SELL signals in three ways. The signals are given with crossovers of MACD and the signal line, divergences of MACD from the security price line and with sharp rises of the MACD line.

Crossovers of MACD and the signal line are easy to spot and interpret. When the MACD line falls below the signal line, it is considered to be a SELL signal. And if the MACD rises above the signal line it is a BUY signal. Let's look at this graphically.

[You must be registered and logged in to see this image.]

The dotted line is the signal line whereas the solid line is the MACD. You will observe that after the MACD crosses the signal line from above to below it is a SELL signal and the accompanying stock chart confirms the downward trend. However, you will also observe that the signal is given after the stock has started its downward trend. But it can be used as a tool to confirm the stock's downward trend.

A problem arises when the stock is moving sideways (that is to say the prices are moving up and down without an identifiable trend), there will be many crossovers and you simply cannot buy and sell at all these signal points. In such an instance the signals will have to be used in conjunction with other formations as well.

Another signal is given when the MACD diverges from the security's prices. That is when the MACD and the security price line moves in opposite directions. When this happens it is signals that the current trend is over and you should structure your BUY or SELL decision accordingly.

You would remember from our earlier discussions that a downtrend is confirmed with successive lower highs and lower lows. If you see the graph below the price line confirms the downtrend with a lower low. However, the MACD line shows less downside momentum with a higher low. This is considered to be a sign of the reversal in the current downtrend.

[You must be registered and logged in to see this image.]

The above chart depicts a bullish divergence which signals a reversal in the current downtrend.

The other signal is given when the MACD rises dramatically and is a signal that the security is overbought and will soon return to its normal levels. As the chart below shows the MACD rises significantly which could mean that the security is oversold. This sharp increase is followed by an equally sharp decline which brings the price back to normal levels.

[You must be registered and logged in to see this image.]

As a closing comment we would remind you to use this indicator with other techniques before taking the final BUY or SELL decision.

Sri Lanka Equity Analytics
www.srilankaequity.com

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks great stuff..

npc86

avatar
Manager - Equity Analytics
Manager - Equity Analytics
Hi Quibit,

This was a very valuable for me .
Thanks a lot.
And Please look at this link and tell me how it happen. MACD is below but price moving up...?
confused confused
[You must be registered and logged in to see this image.]

And here
[You must be registered and logged in to see this image.]

what can we predict about the share price (buy/sell) for this kind of MACD pattern...?
Thanks in advance...!
Smile

npc86

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@Quibit wrote:
[You must be registered and logged in to see this image.]

And How did you set above green/Red Arrows at crossing points.
(I need to know about the technical option I should follow to set as above in my online trading charts...?
Thanks Smile

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Just to get an idea ,what is the ideal time period (eg. 2 years, 1 year, 6 months , 3 months etc.) that one need to take into consideration when you do a moving average analysis?


.

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
i prefer..shorter time periods..however thats me..

Quibit

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Technical sector moderator is Gann, I am sure he will be able to help you with most of these question. I am an ameature compared to his knowledge.

gann

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@npc86 wrote:

And How did you set above green/Red Arrows at crossing points.
(I need to know about the technical option I should follow to set as above in my online trading charts...?
Thanks Smile

You could add the macd strategy if you are using directfn. Macd strategy in Directfn marks the signal line cross overs automatically.
To add
Strategies-> Macd

gann

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@npc86 wrote:
what can we predict about the share price (buy/sell) for this kind of MACD pattern...?
Thanks in advance...!
Smile

Technical indicators of these sorts are useful if you are developing a trading strategy. You come up with a trading strategy by putting together one or more indicators. A strategy is set of simple rules that creates buy and sell signals based on values of the chosen set of indicators. Back test it to check the past profitability. After you have fine tuned your strategy, you could put it to action and follow the strategy. That way you are keeping your emotions affecting your trading by following predefined set of rules.

Buy/Sell signals of these indicators are effective only when the stock is trending. (not when trading in a tight range). SO before you take measurements of these indicators look at the chart and see if the price is moving diagonally, ie from the bottom left to top right of the screen or top left to bottom right Smile

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks gann great information..

happy trading

npc86

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@gann wrote:
@npc86 wrote:
what can we predict about the share price (buy/sell) for this kind of MACD pattern...?
Thanks in advance...!
Smile

Technical indicators of these sorts are useful if you are developing a trading strategy. You come up with a trading strategy by putting together one or more indicators. A strategy is set of simple rules that creates buy and sell signals based on values of the chosen set of indicators. Back test it to check the past profitability. After you have fine tuned your strategy, you could put it to action and follow the strategy. That way you are keeping your emotions affecting your trading by following predefined set of rules.

Buy/Sell signals of these indicators are effective only when the stock is trending. (not when trading in a tight range). SO before you take measurements of these indicators look at the chart and see if the price is moving diagonally, ie from the bottom left to top right of the screen or top left to bottom right Smile

Thanks gann..!
can you send some of link/material which we can study it in details....?
Smile

chamith

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

npc86

avatar
Manager - Equity Analytics
Manager - Equity Analytics

vicorka


Stock Trader
MACD is good, but you may want to readjust your settings in periods of different volatility.

http://www.marketvolume.com/

hasintha

avatar
Senior Equity Analytic
Senior Equity Analytic
Divergence in NTB

[You must be registered and logged in to see this image.]

http://hasi-journal.blogspot.com

K.Haputantri

avatar
Co-Admin
?Can an expert intepret this NTB chart.

Jeremy

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Good one from the previous administrator Qubit..

SHARK aka TAH

avatar
Expert
Expert
@hasintha wrote:Divergence in NTB

[You must be registered and logged in to see this image.]
proper divergence should be the price of share falls below last low and whereas MACD does not fall below its low  Very Happy 

if you look at LFIN you will see the difference..... Rolling Eyes 

jehovah

avatar
Equity Analytic
Equity Analytic
lol!

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum