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FXS-MACD

Doug Schaff

FX-Strategy

http://www.fx-strategy.com

Name: FXS-MACD
Characteristic:  Trend Direction
Parameter Defaults:  Length 28
Plots:  MACD
Signal 
Histogram

Moving Average Convergence and Divergence (MACD) was developed by Gerald Appel as a means to anticipate crossovers in moving averages that could potentially imply a reversal in price direction. The MACD line is constructed by taking two exponential moving averages and subtracting the value of the longer moving average from the shorter moving average. A signal line is then calculated by taking a 9-period exponential moving average of the MACD line.

EUR/USD (1 day 1 yr.)
 Usage

There is no difference in usage between the standard MACD and FXS-MACD. The benefit of the FXS-MACD is that the MACD line tends to be smoother and suffers fewer whipsaws such as that shown in the daily chart of the EURUSD. Note how the FXS-MACD remained positive for the entire uptrend and avoided the three occasions when the standard MACD crossed lower. This is also seen in the histogram, representing the difference between the MACD line and the signal, which remains above zero for this period.


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