EURUSD 8hr chart

 

Update @7:35am : This trade activated and then retraced some, activating the stop loss. After that it moved toward the 50% and past it. This trade a correct, I just had my stop loss to close.. See second chart

Going to do a little selling action on the EURUSD back toward the daily pivot and the 50% fib

Sell Entry 1.08985

Stop – 10pips

Limit – 10 pips

Forex Trading With MACD

Forex Trading With MACD

MACD – stands for Moving Average Convergence Divergence, is known to be one of the simplest and most reliable indicators in Forex World. The forex MACD indicator is developed by Gerald Appel. Traders use the tool for getting early trading signals or divergences between market prices.

MACD will let you locate bull divergences and bear divergences and these divergences are rare and effective patterns on Forex Trading.

What you can do with MACD indicator?

Identify a trend – The MACD can be used to help you identify the current trend of the forex market. You will be able to tell whether the market is currently in an uptrend or in a downtrend, simply from the position of the MACD line.

Identify a reversal – Besides using the MACD indicator to analyze the trend of markets, you can also make use of it to help you identify a reverse in trends. And it can be done by reading the histogram of the MACD. It can be used to interpret whether the buyer is stronger or seller is stronger at any particular moment, depending on the position of the histogram in MACD. In addition, the occurrence of divergence in MACD also helps to signal an incoming reversal.

Confirm a breakout – There are a lot of false signals are available in the market and this is also the main reason why most new traders lost their money within their first few months of trading. And the best way to reduce the chance of losing money due to false signal is to make use of the MACD indicator perfectly. You can use the MACD and its trigger line to validate or invalidate a trend’s line break or a breakout and this can save you a lot of money.

Downside of MACD

The negative side of MACD is, sometimes it will give you too many false signals about markets, because of their instability. Therefore, the best way to use MACD on any kind of market is for spotting divergences and confirming trades.

MACD is also not good in identifying overbought and oversold levels. However, there is a possibility to identify levels that historically represent overbought and oversold levels, but MACD doesn’t have any upper or lower limits that would bind its movement. Basically, MACD is capable of overextending beyond historical extremes.

Personally, I find this indicator very useful as it has multiple features that can help to better enhance a trade and it is very reliable indicator for forex trading. Now you can imagine about the ability of this indicator. So, spend some time to play with this indicator and get used to it before integrating it into your trading plan.