Lesson 5 - Moving Average Convergence & Divergence (MACD)

One of the most popular indicator is teh MACD (Moving Average Convergence & Divergence), which usually known as MACD (12,26) & Signal (12,26,3). This MACD actually consists of EMAs calculation.

The MACD (12,26) means EMA 12 - EMA 26, and the Signal is the EMA 3 of MACD. This MACD sometimes can create a very great signal that a lot of people don't discover the signal which can produce a great amount of income for us.

MACD's ability besides of giving a buy or sell signal, it also can produce a reversal signal either bullish or bearish.

Two major reversal signal which are known as Bullish Divergence & Bearish Divergence. These signals aren't popular because we need a precision in looking at this moment, which finally can save us from the 'hell'. People always say that not all stock can be detected, but I can say that a lot of stock can be detected this way.

1. Bullish Reversal

Identified with some clues:

1. Price in a downtrend, with volume decreasing
2. MACD Histogram is moving at Slope - Peak - Slope
3. 1st Slope is lower than the 2nd Slope
4. After the last Slope finished & creating a new Peak, it's time to enter the market

See the chart below at Bumi Resources (BUMI.JK) stock, we can see a very clear position.

 2. Bearish Reversal
Identified with some clues:

1. Price in an uptrend, with volume decreasing
2. MACD Histogram is moving at Peak - Slope - Peak
3. 1st Peak is higher than the 2nd Peak
4. After the last Peak finished & creating a new Slope, it's time to Exit the market with a confirmation

See the chart below at Bumi Resources (BUMI.JK) stock, we can see a very clear position.




Here's the link of movie I said, you can get from the torrent software at utorrent.com & download this file & open using the software to download the movie.
http://www.ziddu.com/download/12321254/RogueTrader.torrent.html
And this is the subtitle:
http://www.ziddu.com/download/12321265/RogueTrader.zip.html
Rename the video & Subtitle with the same name, so that you can watch the movie with the subtitle.

Here's the link of Money Management Workbook I promised:
http://www.ziddu.com/download/12322012/MoneyManagement.xlsx.html

Happy Investing^^

Disclaimer ON!!!