MACD indicator vs price action

A very popular indicator in the world of Forex trading is the MACD (moving average convergence divergence). The MACD is a trend following momentum indicator that shows the relationship between two moving averages of prices. The MACD is by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA calculated. A nine day EMA of the MACD, called "signal line", is about the MACD works as a trigger for buy and sell signals geplottet.

Price action to make trade includes analyzing learning a "naked" or counter-free price chart, the Forex trading decisions. Traders who enjoy trade price action as their primary chart analysis tool the clutter-free approach, the "Plain Vanilla" price chart reading brings. Price action traders enjoy the fact, that learn to analyze simple price action Setup which makes them, local potential moves themselves are as MACD generates an entry signal on the market before each indicator. For these reasons and more believe many traders price action be the best Forex strategy.

MACD vs. price action

Price action easily wins the battle with MACD, when it comes to identifying trending markets and identifying high-probability entry points. The main reason this is so, because once you know provided as based on price dynamics to identify a trend, they are based to your trading decision from the "core" market data, instead of the secondary interpretation of MACD.

For example, through a series of higher highs and higher lows and a downward trend through a series of lower highs and lower lows, price action traders identify an uptrend. Once you know how you based this price trend action identifiers, it is a very simple thing to look at every market to all time frame and an uptrend downward trend or consolidation is determined whether this market. On the other hand, if you to identify trends have been relying on MACD, no context to based on the current analysis from should you, as if the MACD has increased or decreased above or below the "signal".

In addition, it is easy not to try information to identify trends or turning points in markets, based on indicators, either alone or in conjunction with price. Price action provides an own guidance for trend identification, and it offers even traders with easily identifiable in times of high probability a trading Setup that can use it in the market. So because you can learn to analyze, such as a market solely on price action really there is no need to redirect your focus and attention by focusing on secondary indicators. You want more information to the price action, you can check out this price-action tutorial video.

In the following table, we see the daily NZDUSD currency pair with a standard MACD indicator applied. A few things to keep in mind here; First of all during the time when moving the NZDUSD side in a trading range, the MACD was absolutely useless and would have caused confusion and indecision, knowledge of the simple price action strategies and confluent levels at least 2-3 excellent entry possibilities would have provided.

Next of know how you could to identify down trends by lower highs and lower lows in the price we have easily saw this market started lower trend. A blatantly problem is that the MACD moved through the signal line on a slight pullback in price, we have an obvious bearish in bar Setup with the downward trend was forecast during MACD of actually bullish momentum. We see then, dropped the price of a cliff netting-savvy price action traders the ability to make risk 3 times or more. Learn more about why trade destroyed with indicators Forex trading success, click here.