MACD: The Indicator that Measures Market Momentum
The MACD (Moving Average Convergence Divergence) is a technical indicator that shows the strength and direction of the trend, comparing two moving averages (12 and 26 periods) and a signal line (9 periods). Its histogram helps to see if momentum is increasing or decreasing.
What is it used for?
Detecting trend changes.
Marking potential entries and exits.
Confirming if the market is accelerating or losing strength.
Typical beginner mistakes 🤦♂️
Entering only on the MACD crossover without looking at the overall trend.
Believing that every divergence is an immediate signal.
Using it in sideways markets, where it often fails.
Ignoring the time frame, which completely changes the reading.
💯Quick tip: the MACD works best when used together with volume or support/resistance levels.
