Posted by forex at 8:38 AM
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1. Select a currency pair to trade. Make sure you have trading software or an online brokerage that allows you to display the price chart of the currency pair along with the MACD.
2. Observe the indicator and notice how the MACD and the signal line periodically cross above and below one another. When the MACD crosses above the signal line, it is a signal to buy and when it crosses below the signal line, it is a sell signal.
3. Notice that there is a horizontal line passing through the MACD. Use this line as an indication of support and resistance. If the MACD bounces off this line, look for a corresponding reversal in the price of the currency pair.
4. Constantly compare the price trend with the trend of the MACD. Usually these will correspond, but watch out if the price trend of the currency pair diverges from the MACD. This usually indicates a reversal of the overall price trend.