MACD Divergence signals

By | June 30, 2009

MACD Divergence Signals.
There are 3 types of Bullish signals that can come from the MACD Indicator. The three types are:
a. Positive Divergences
b. Bullish Moving Average Crossovers
c. Bullish Centerline Crossovers, and …

There are 3 types of Bearish signals that can come from the MACD Indicator. The three types are:
a. Negative Divergences
b. Bearish Moving Average Crossovers
c. Bearish Centerline Crossovers

A Positive MACD Divergence is a condition that occurs when the underlying security moves down or sideways and the MACD does the opposite by rising or making a higher/low. Of the three kinds of MACD Bullish signals, the Positive Divergence signal is the least common but typically the most reliable signal. Bullish MACD Divergences are regarded as an important “bullish” sign by technical analysts.

Conversely, a Negative MACD Divergence is a condition that occurs when the underlying security moves up or sideways and the MACD does the opposite by declining or making a lower/high. Of the three kinds of MACD Bearish signals, the Negative Divergence signal is the least common but typically the most reliable signal. Bearish MACD Divergences are regarded as an important “warning” sign by technical analysts.

Now look at Nasdaq Charts negative divergene is easily visible.

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