Moving Average Convergence/Divergence XAUUSD Technical Analysis & MACD XAUUSD Signals
Created by Gerald Appel,
The Moving Average Convergence/Divergence is one of the simplest, reliable, & most oftenly used indicators.
It is a momentum oscillator & also a trend-following indicator.
Construction
The construction of this indicator calculates the difference between 2 moving averages and then plots that as "Fast" line: the second "Signal" line is then calculated from the resulting "Fast" line and then drawn on the same panel window as "Fast" line.
- "Fast" line - Blue Line
- "Signal" line - Red Line
The "standard" MACD values for "Fast" line is a 12-period exponential moving average & a 26-period exponential moving average & a 9-period exponential moving applied to the fast line, this plots "Signal" line.
- FastLine = difference between 12 and 26 exponential moving averages
- Signal-line = moving average of this difference of 9-periods
XAUUSD Technical Analysis and How to Generate Trading Signals
The MACD is oftenly used as a trend-following indicator & works most effectively when interpreting trending market movements. The 3 common methods of using MACD to generate signals are:
XAUUSD Trading Crossovers Gold Trading Signals:
FastLine/Signal Line Crossover:
- A buy signal is generated when Fast-line crosses above Signal Line
- A sell signal is generated when the FastLine crosses below the Signal-line.
However, in a strong trending market this xauusd signal gives a lot of whipsaws, the best cross over to use would thus be the Zero Line Crossover Signal that's less prone to whipsaws.
Zero Line Crossover Trading Signals:
- When the Fast-line crosses above the zero center line a buy trading signal is generated.
- when the FastLine crosses below the zero center-line a sell signal is generated.
Divergence XAUUSD:
Looking for divergences between the MACD & gold price can prove to be very effective in spotting the potential reversal &/or trend continuation points in gold price movement. There 2 types of divergences:
- Classic Divergence Signals
- Hidden Divergence Trading Signals
Overbought/Oversold Conditions:
MACD indicator is also used to spot potential overbought-oversold conditions in gold price action movements.
These levels are generated if the shorter MACD Lines separate dramatically from the median, this is an indication that gold price action is over-extending & it will soon return to more realistic levels.
MACD and Moving Average XAUUSD Trading Crossover Gold Trading System
This xauusd indicator can be combined with others to form a trading system. A good combination with the Moving Average crossover system. A signal is generated when both give a signal in the same direction.
Technical Analysis in XAUUSD Trading
