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Overbought/Oversold Conditions:
Another usage of MACD in currency trading is overbought or oversold indication. If the distance between shorter and longer moving averages gets very big while the MACD goes up it means that the security price is possibly dragged out and is about to come to its ordinary levels. |
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Divergences:
In the market of currency trading if MACD differs much from the price of a security it can be the sign of current trend end approaching. |
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these trends appear at the levels close to overbought or oversold then the divergences are supposed to be considerable.
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Otherwise, in case MACD reaches high peaks while the prices don't follow this trend a bullish divergence turns up. In case these trends appear at the levels close to overbought or oversold then the divergences are supposed to be considerable.
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In currency trading, we advise you to test this tool in demo account trading before using it in real account.
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