Forex encyclopedia

In the Moving Average Convergence-Divergence (MACD) indicator, convergence is the norm and divergence is an anomaly. As an anomaly, a divergence holds no power over convergence. A divergence is simply an unexpected event and is purposed to be overlapped by another convergence. Thus, it is a mistake to treat divergence as a signal for an impending change in trend. Divergence is a sign that there might be a change in price movement. It doesn't matter if divergence is Bullish or Bearish or Hidden. A divergence is a divergence, nothing more. What's more important in MACD is price behavior following right after any divergence, because that is the true signal. Check how it is shown on the below chart:
The market price of each movement in a certain period of time can be represented in the form of candles, possessing the opening, closing, high and low prices. Appearing one after another, Japanese candlesticks show traders information about the market movement. But as it is well known, analysis of Japanese candlesticks is subjective and even the brightest candle patterns are not always triggered with absolute precision. Therefore, analysis of individual candles and their combinations has some features. 1. The place where candle pattern occur The first in the such feature of this type of analysis is the o place where candle pattern occur on chart. Prior to opening a position, you should carefully study the market situation that preceded appearance of combination of candles. For example, the pattern "dark cloud" that emerged near the strong resistance level, should be interpreted more as a reversal pattern rather than "bearish" absorption showed outside the scope of resistance. The same way, formation of "doji" after a prolonged trend is a much more significant model than if a candle occurs on a flat market.
New in Encyclopedia
Picture of the day
Productivity
Forex encyclopedia
Forex encyclopedia “Clever FX” is the unique service created by FreshForex to introduce world of Forex to traders. The main purpose is to share knowledge of experienced traders with novice traders in simple and convenient form. Every trader will be able to learn something new here. If you are a professional trader, we invite you to write an article for “Clever FX” and get reward. Let's write Forex history together!
Close
Log in
Your browser does not support cookie. If cookie is disabled in your Internet browser, you may have problems with accessing Client Area. How to enable cookie .
manager photo manager photo
Online-support
We will be pleased to answer any questions you may have

Write

Get bonus