Some of the most accurate information regarding proper forecast of future prices is provided by usage of technical analysis. One of the important instruments in technical analysis is the Moving average. The Moving average convergence Divergence indicator helps show the fluctuations of price above and below the moving average line. Not only does it show the strength and direction of the trend but also acts as an accurate forex signals free.
Since 1970’s traders have been using the MACD as an important tool to determine momentum of trade and detect price reversals if any. As the name suggests, it shows how much the current price levels lag ahead or behind past data. The most accurate Forex signals free of cost normally take past data and predict future trends.
Introducing MACD as an accurate forex signals free:
MACD is one of the most important tools that traders often use. If you are more concerned about moving averages, you must have prior information that it’s lagging and consists of two exponentially moving average lines. Basically traders calculate a 12 day Exponentially Moving Average data combined with a 12 day EMA. Another 9 days EMA data is plotted which forms the signaling line.
Accurate forex signals free thus generated from the difference between the two lines is plotted on a single diagram. Use of EMA ensures that currency traders concentrate more on the current price trends rather than on distant past data. This is exactly why simple moving averages are avoided.
Method of finding accurate forex signals for free using MACD:
There are two types of moving average lines (slower 12 days/26 days and faster 9 days). If the faster line crosses the slower one from below, it indicates that the intersection is the new signal denoting a possibility of entry.
On the other hand if raising prices and the intersection of the faster and slower lines indicate positive movement, it’s a bearish market. Traders should buy more of the currency at this point. Inversely, if prices are falling beyond the intersection, it’s a bullish market.
Often situations are such that shorter EMA moves away from the long term EMA. Veterans are of the opinion that accurate forex signals free generated from this indicates that it’s an overbought situation. However it also indicates that prices will soon return back to its normal position.
Additionally, the zero Line crossover type is an indicator also used to denote potentially accurate forex signals free. When the Moving average cuts the zero line from below, it indicates the emergence of a new uptrend. Conversely, a cut in the zero line from above denotes a down trend.
Does MACD auto adjust?
Experts are of the opinion that increasing the number of periods for calculating the signal line (normally done with 9 days) will help avoid false forex signal for you. Additionally it may also help in capturing reversals. Remember that although MACD aims to provide near to accurate data, it is not absolute flawless. Divergence parameters also do not help identify price reversals.
Conclusion | Is MACD the best accurate forex signals for free:
MACD is one of the simplest trend identifying tools used for measuring the most accurate forex signals free of cost. The location of the signal and zero lines alone provide enough information on trend. But still it isn’t enough and you may choose to make use of price analyzing parameters to determine the exact trend.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.