Steemit Crypto Academy Season 2-Week6 - Homework Post for @@kouba01 Cryptocurrency Trading with MACD indicator

_{Image from @kouba01 post}

Hey, all welcome to my crypto homework series. This post is my homework submission to the author @kouba01. Thank you for the wonderful lesson professor I learned a lot from your classes and homework too. Without getting late let's get started.

What is the MACD indicator simply? Is the MACD Indicator Good for Trading Cryptocurrencies? Which is better, MACD or RSI?

Moving average convergence and divergence is the expansion of MACD. This is one of the types of technical indicators used to forecast the stock price. This indicator was used from the late 1970 according to google. This indicator was used by many traders and investors to make their investments on the safe side.

As the professor taught in his lesson MACD is calculated by subtracting the 26-period exponential moving average from the 12-period exponential moving average.

_{MACD formula}

Yes, MACD works absolutely for cryptocurrency traders. I have no idea about MACD before reading the author's post but after getting knowledge from the lecture I went to crypto market history and actuated the MACD thing and I found the result it was working for most of the time.

Both RSI and MACD indicators are an essential role in forecasting the price. The number of signals gives the positive thing will be the possibility of getting the accurate forecasting of the price. Here we have to see how many indicators giving the same signal to the particular trend.

How to add the MACD indicator to the chart, what are its settings, and ways to benefit from them?

Here I am going to demonstrate how to add the MACD indicator to the chart in Binance.com Let's get started.

In the first step, we have to open the chart and click the technical indicator adder as I showed in the above image.

_{Image from Binance chart}

When you click the technical indicator adder your next UI will be like this only. Here you have to type MACD as we need to add the Moving Average Convergence and Divergence. If you need to add some other indicator mean add here. and click the appropriate indicator.

Here you can see in the below screenshot the MACD got added to the chart. we can able to vary the color of the indicator in the setting option.

There is a setting button on the top left corner of the MACD indicator as shown in the below screenshot click that. And you can see the current indicator color and line thickness. We can able to change those here according to our convenience. Hence we added the MACD and changed the settings as we need.

How to use MACD with crossing MACD line and signal line? And How to Use the MACD with the crossing of the zero line?

In this MACD indicator, we have 4 different terms

• MACD line.
• Signal line.
• Zero line.
• Histogram.

MACD line and signal line are important factors that need to the signal. Here you can see that in the below screenshot the blue line is the MACD line and the green thin line is the signal line. Basically, when the blue line crosses the green it shows that the coin price is going to reverse.

• You can see in the below screenshot the blue line MACD line crossed the green signal line hence there we got a signal market reverse that is going to happen. Hence it happened the price went down. Note:- This is one of the factors to consider while using MACD

_{Intersection of MACD and signal line}

MACD with the crossing of the zero line is also a factor that needs to consider during the MACD analysis. The colloidal of two lines at zero points indicates the strong reverse in the market.

• Here in the below screenshot toy can see the colloidal happens very near to the zero line. Hence you can see the market reaction after that. Boomed.

_{Intersection of MACD and signal line at zero line}

If these two things like the crossing of MACD and the signal line on the zero line it was a strong buy signal. You can proceed with it.

How to detect a trend using the MACD? And how to filter out false signals?

_{Entry and exit point}

As I mentioned above the two factors crossing of two MACD lines and the signal line and these intersection happens at the zero line are important here. When this thing happens there will be an inverse in the market.

• Need to put the line on the chart that connects the higher high or lower low of price chart and MACD chart and look into it if the flow was in inverse I mean if the price chart gives down line and MACD shows up line means it gives a strong signal of a bullish market.

• Chart that connects the higher high or lowers low of price chart and MACD chart and looks into it if the flow was in inverse I mean if the price chart gives up line and MACD shows down line means it gives a strong signal of a bearish market.

• To filter the false signal we have to know about more indicators. We have to seek the same signal that gives confirmation for the trend is inverse.

How can the MACD indicator be used to extract points or support and resistance levels on the chart? Use an example to explain the strategy

_{Points to noted on MACD}

Forecasting the price of stock or crypto is the ultimate on the markets and if you are good at it means you are king. See the above screenshot that was my strategy using MACD

• Firstly the crossing of MACD and signal line below the zero line. Here you can see the MACD line went down to the signal line that happened below to the zero line. These indications give me a strong signal to put short order.

• Histogram signals help us to identify the money flow in the market. The buy pressure and sell pressure will be graphically represented in the histogram. This selling pressure gives me that the next confirmation price is going to bearish. The height of each line indicates the pressure of buy and sell if the height increases the pressure of sell or buy increases.

• Putting stop loss for your portfolio is the important thing. As the professor said I planned to put the stop loss on the previous highger.

Review the chart of any pair and present the various signals from the MACD.

Here I am going to review the BNB / USDT pair. Because I am planning to invest in it. This feels like grinding the same thing but it was the fact in the MACD technical indicator.

The main thing here MACD line crosses above the signal line traders interpret it as a buy signal right. But nowhere in our below cases, we have diverse cases hence it is a sell signal.

_{BNB / USDT pair on Binance}

The flow of the price chart and the MACD also indicates that there is no divergence formation. Hence we have no bullish signal. Hence I am planning to buy the BNBDOWN leverage token or put Short order.

Conclusion

Moving Average Convergence and divergence is much indeed indicator it is suitable for all the stock crypto traders. I need to thank the professor for the wonderful lesson without your lecture I have zero knowledge of MACD. I did this homework with my knowledge I gained from your lecture post and the images used in this homework are mine not copied from anyone and I did my best to put all the answers for the question.

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CC:-
@kouba01