MACD is an oscillator indicator.

As an oscillator indicator,MACD indicator was created by Gerald appel in order to help traders to know whether the market has experienced an oversold or overbought market condition. As an oscillator indicator,MACD indicator can also be used to identify the momentum and the trend of a given cryptocurrency. As an oscillator ,MACD has an oscillation at point 0.

According to Gerald Appel,MACD indicator has 3 periods,that is 12,26 and 9.These three periods are the Exponential Moving Average .The difference between 12-period and 26-period represent the Exponential Moving Average of the MACD while 9 represent the signal line

Therefore, the values of MACD is calculated using the following formula:


MACD= (EMA close 12)- (EMA close 26)


where as;


EMA is exponential moving average while;


MACD is moving average convergence divergence.

 

 

1.Oversold cryptocurrency market for MACD


The oscillation point of the MACD indicator which is zero is the one that will have a straight base line.The red curve line along this base line is the one that is the signal line and has a period of 9.The blue curve crossing above or below the signal line is the MACD curve and is the difference between the two EMA,that is 12-period EMA and 26 period EMA.When the MACD curve crosses above the signal line at below 0.00,that will be an indication of an oversold market thus the cryptocurrency trader should purchase a given amount of cryptocurrency in terms of USDT if they have a USDT balance in the trading account. The cryptocurrency trader can either place a market buy order which will be executed instantly or they can decide to place a buy limit order which will be executed when the market triggers their limit order.This is indicated as from the candlesticks chart below;

 

 

 

The above candlesticks market represent the TRX/USDT market.

Three points are being indicated. There is point A ,B and point C. Point A represents the signal line while point B represents the MACD curve.On the other hand,point C represents the crossover point where the MACD curve crosses above the signal line. The signal line has a period of 9 while the MACD curve has a period of the different between the EMA of 12 and 26. In full MACD is moving average convergence divergence while EMA is exponential moving average. As indicated from above, at point C,the MACD curve has crossed above the signal line at below 0.00 thus indication of an oversold market condition over there.This will signal the cryptocurrency trader to purchase some given amount of TRX with their USDT balance in their account since the market is starting to move upward over there. The cryptocurrency trader can either place a market buy order which is going to be executed instantly or they can place a buy limit order which will be executed when the price reaches their limit order. When the price of TRX has started to move upward,their account will start to appreciate in value.

 

 

2.Overbought cryptocurrency market for MACD


The oscillation point of the MACD indicator which is zero is the one that will have a straight base line.The red curve line along this base line is the one that is the signal line and has a period of 9.The blue curve crossing above or below the signal line is the MACD curve and is the difference between the two EMA,that is 12-period EMA and 26 period EMA.When the MACD curve crosses below the signal line at above  0.00,that will be an indication of an overbought market thus the cryptocurrency trader should sell the amount of cryptocurrency which he had previously purchased and is currently holding to avoid making their to start depreciating in value. The cryptocurrency trader can either place a market sell order which will be executed instantly or they can place a sell limit order which will be executed when the market reaches their limit price order. This is indicated as from the candlesticks chart below;

 
 

The above candlesticks market represent the TRX/USDT market.

Three points are being indicated. There is point A ,B and point C. Point A represents the MACD curve while point B represents the signal line.On the other hand,point C represents the crossover point where the MACD curve crosses below the signal line. The signal line has a period of 9 while the MACD curve has a period of the different between the EMA of 12 and 26. In full MACD is moving average convergence divergence while EMA is exponential moving average. As indicated from above, at point C,the MACD curve has crossed below the signal line at above 0.00 thus indication of an overbought market condition over there.This will signal the cryptocurrency trader to sell the amount of TRX which he had previously purchased and is currently holding to avoid making the trading account to start depreciating in value. The cryptocurrency trader can either place a market sell order which will be executed instantly or they can place a limit sell order which will be executed when the market tirggers their limit sell order. When the order is being executed,the account of the cryptocurrency trader will have increased in value in terms of USDT.

 


Recommendation: Cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you are placing a buy order,always make sure to apply risk management so that whenever your buy order goes against you,your account do not depreciated so much.

 
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