A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.
Components of MACD graph:
- MACD line – difference between 26-day moving average and 12-day moving average
- Signal line – 9-day moving average
How to use MACD:
First of all, we need to know crossover. A crossover happens when MACD line meets or crossses the signal lin
Buy – When MACD line crosses the signal line in an upward manner. Pansinin natin, nasa taas ang MACD line at nang nagtagpo sila ni signal line, nasa baba na ito
Sell – When MACD line crosses the signal line in a downward manner. Pansinin natin, nasa baba ang MACD line at nang nagtagpo sila ni signal line, nasa taas na ito.
The sample below shows the Buy and Sell signals I discussed above.
- Blue line – MACD line
- Orange line – Signal line
Mayroong 4 na crossover. 2 Buy at 2 Sell:
- MACD gave a Sell signal on Feb 9 – On Feb 9, MACD line crosses over the Signal line on a downward manner hence the sell signal is given
- MACD gave a Buy signal on Mar 3 – On Mar 3, MACD line crosses over the Signal line on an upward manner hence the buy signal is given
- MACD gave a Sell signal on Mar 12 – On Mar 12, MACD line crosses over the Signal line on a downward manner hence the sell signal is given
- MACD gave a Buy signal on Mar 30 – On Mar 30, MACD line crosses over the Signal line on an upward manner hence the buy signal is given
Case Study 1: MBT
Buy Signal: Nagkaroon ng crossover ang MACD line at Signal line noong 12/23/2014. Ang MACD line ay galing sa baba at pumaibabaw sa signal line kaya nagbigay ito ng Buy signal
Sell Signal:Nagkaron muli ng crossover ang MACD line at Signal line noong 2/4/2015. Ngayon, ang MACD line na galing sa taas ay pumaibaba sa signal line kaya nagbigay ito ng Sell signal
Kung nasundan mo ang MACD technique na ito at bumili ka ng 100 shares, kumita ka sana ng PHP1,096.20.
Capital: 100 Shares * 80.836 = 8,083.60
Sold at: 100 Shares * 91.798 = 9,179.80
Profit: 9,179.8 – 8,083.60 = 1,096.2
