Understanding The MACD Divergence Convergence Trading Strategy

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Understanding MACD convergence divergence (often referred to as the MACD Crossover, although that is an altogether different trading strategy)is an easy, useful, consistent trading strategy to learn; especially for new traders who want to learn Swing Trading.

When the price makes a lower low, while at the same time the MACD is making a higher low — this is what’s referred to as bullish divergence.

Conversely, if the MACD makes a lower high and the price makes a higher high — this would be considered bearish divergence.

Divergence, either bullish or bearish, almost always happens right after a sharp price movement in the asset you’re charting.

At it’s core, divergence is a strong sign that the price is about to reverse. One way you can determine if a reversal is imminent, is to watch and wait to see if the move is followed by a trendline break. This is the biggest part of the moves confirmation.

Now that you have a decent confirmation, the hardest part is over.

Next, you need to to a few more things in order to maximize your chances of success and secure your potential profits. Now that you have confirmation, you Continue Reading…