There are plenty of indicators you can use in technical analysis. However, a few indicators are the most popular among technical analysts. The most common indicators are: Bollinger Bands (BB), Relative Strength Index (RSI) and the 3rd most used indicator is called "MACD".
MACD is a great indicator that can tell us more than what is happening in the present with the stock we are looking at. It can actually tell us if there is a chance of a change in a trend. When looking at the MACD of a chart, it can help us to estimate what is going to happen. If the trend of the stock we look at is going to change or remain the same trend.
The image above shows us how MACD looks like. There are two lines in the MACD. The MACD line, and the signal line. Whether the MACD line crosses with the signal line there is a potential opportunity for us to buy or sell the stock.
Of course, the values change according to what timeframe you are looking for. If you are looking at a daily chart, then the MACD will only be adjusted to the daily chart, the same with any other time frame. So pay attention to what timeframe you look at.
How to use MACD to buy and sell?
In MACD, there is a cool tool which is called "Histogram". It shows you in a clear way the differences between the MACD line and the signal line and fetch it into an easy-to-understand tool that helps us to predict the trend change.
The histogram in the pic is white color. It shows any changes in the difference between the MACD line and the signal line. Therefore, once the Histogram "loses" its positive value, then it might be an opportunity for us to detect an upcoming downtrend. Same with the opposite. If the negative value of the histogram is losing its momentum and becomes positive then it could be a change in the trend as well.
However, you can't rely only on MACD! It only helps you to better analyze a stock. But combining more than 2 indicators together is recommended in order to be a good technical analyst!
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