BMI - MacD Magic Monster (BMI - MacD Magic Monster) - MT4/MT5 Resources
Does everyone know that MacD is right?
But have you ever wondered what the neutral line is?
Once you know what the zero line actually is, MacD takes on a whole new meaning and becomes a powerful indicator.
Have you ever wondered why MacD is rising, moving up from well below the zero line to the zero line, but the price is still falling?
Some say this is a departure, it shows... blah blah blah.
But what that actually means is, let's find a statement that sounds valid, because since MacD came out, it's definitely going up...?
As you can see in this image, the price is moving south when the MacD (standard color settings in the indicators tab is a little better) is set to 12,26,9. The zero line is also a thick blue line.
http://img228.imageshack.us/img228/658/macd1.png
Now the chart below has some EMAs.
EMA 47 (12+26+9)
EMA 14 (26-12)
EMA 2 (12-9)/2
http://img32.imageshack.us/img32/4092/macd2.png
Not an exact copy of MacD, but pretty close isn't it?
To drive this concept fully into your mind, the next image has the same EMA value in a separate window.
So now we have a sloping MacD that doesn't give the illusion of an upward move when the zero line is actually not a horizontal line but an EMA.
However, since we think of it as a straight line in MacD, our natural tendency is to think that anything moving up below it is actually moving up.
http://img168.imageshack.us/img168/3003/macd3.png
By zooming out to the maximum, it becomes very easy to fully perceive the correct way of what MacD is showing us.
The orange line in MacD below shows a non-contradictory downtrend. The vertical white line is the intersection on the MacD and also on the EMA version of the same Macd. Therefore, by observing the trend, one does not have to panic and close short trades just because the MacD is moving north. It can be simply seen that every time the 'zero' line is touched, it is still lower than the last time it was touched.
http://img227.imageshack.us/img227/4109/macd4.png
But have you ever wondered what the neutral line is?
Once you know what the zero line actually is, MacD takes on a whole new meaning and becomes a powerful indicator.
Have you ever wondered why MacD is rising, moving up from well below the zero line to the zero line, but the price is still falling?
Some say this is a departure, it shows... blah blah blah.
But what that actually means is, let's find a statement that sounds valid, because since MacD came out, it's definitely going up...?
As you can see in this image, the price is moving south when the MacD (standard color settings in the indicators tab is a little better) is set to 12,26,9. The zero line is also a thick blue line.
http://img228.imageshack.us/img228/658/macd1.png
Now the chart below has some EMAs.
EMA 47 (12+26+9)
EMA 14 (26-12)
EMA 2 (12-9)/2
http://img32.imageshack.us/img32/4092/macd2.png
Not an exact copy of MacD, but pretty close isn't it?
To drive this concept fully into your mind, the next image has the same EMA value in a separate window.
So now we have a sloping MacD that doesn't give the illusion of an upward move when the zero line is actually not a horizontal line but an EMA.
However, since we think of it as a straight line in MacD, our natural tendency is to think that anything moving up below it is actually moving up.
http://img168.imageshack.us/img168/3003/macd3.png
By zooming out to the maximum, it becomes very easy to fully perceive the correct way of what MacD is showing us.
The orange line in MacD below shows a non-contradictory downtrend. The vertical white line is the intersection on the MacD and also on the EMA version of the same Macd. Therefore, by observing the trend, one does not have to panic and close short trades just because the MacD is moving north. It can be simply seen that every time the 'zero' line is touched, it is still lower than the last time it was touched.
http://img227.imageshack.us/img227/4109/macd4.png
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