MACD Trading Strategy: How to Identify Profitable Crypto Trends

The Moving Average Convergence Divergence (MACD) is a widely used tool in technical analysis. It provides traders with insight into market momentum and potential price reversals. Gerald Appel developed the MACD in the late 1970s. It is a trend-following indicator that helps traders identify changes in the strength, direction, momentum, and duration of a trend. By comparing two moving averages of an asset’s price, the MACD can signal when a new trend might be forming. This makes it a valuable resource for timing entry and exit points in the highly volatile world of crypto trading.

Intro to MACD

MACD measures the convergence and divergence over time of two moving averages of the price of an asset.

MACD indicates the separation between the value of two moving averages with different calculation periods.

When the crossing of the MACD line with the Signal line occurs from the bottom up, the MACD exceeds the signal, the trend will be bullish.

When the crossing of the MACD line with the Signal line occurs from top to bottom, the Signal exceeds the MACD, the trend will be bearish.

RSI + MACD

MACD and RSI indicator combine very well. Both seek to identify early the creation of a bullish or bearish trend.

To alert the trader on whether he should buy or sell a certain position.

Therefore, the analysis of only one of the indicators may be insufficient.

MACD Histogram

The MACD histogram (known as MACDh) measures the distance between the two MACD curves.
But visually it is very useful because it indicates if the trend is bullish or bearish.

It also tells us if there is buying pressure or if there is selling pressure.

MACD conclusion

The MACD is a technical indicator that measures the strength of the price movement.

To confirm the signals of the MACD, it is advisable to use it in conjunction with another technical indicator.

Such as the RSI, stochastic, volume…

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Thanks to CryptoSoulz for all the information