OK the next technical indicator that I want to share with you in this course is the Mac D Mac D stands
for moving average convergence divergence.
It's a trend following indicator that shows you the relationship between two exponential moving averages
for trading crypto currencies.
We'll use the nine day EMJ in the 50 day EMJ when using this indicator.
There are three important lines that you'll need to take into account the Mac D line the signal line
and the zero line by looking at these lines you can easily spot incoming market trends.
You can determine whether a coin is going up or down in value in the near future.
The first line is the Mac line.
It's calculated by subtracting the 50 day EMJ from the nine day EMJ.
It's simply the difference between that EMJ 9 and that EMJ 50 after the Mac díaz calculated the nine
day EMJ of the Mac D line is then plotted with the indicator to act as a signal line or a trigger for
buy and sell signals in the final line is the zero line.
The zero line is simply a line that separates positive and negative values within the oscillator and
the good news is you won't have to do any calculations.
Most trading tools will help you draw these lines.
So now you just need to know what they are and how to apply them.
Here's what the Mac indicator looks like.
As you can see on the screen the orange line is the signal line.
The blue line is the Mac line and the line that separates negative and positive values is the zero line.
So how can we use this indicator to spot market trends.
There are two ways that you can use the Mac D for trading crypto currencies.
The first one is to use the Mac D line and signal line crossover strategy to spot a market move.
This strategy is simple but it's very helpful and it's quite similar to the moving average crossover
strategy that you've learned in the previous lessons.
Ok here's an up turn signal when the Mac D line crosses above the signal line and both lines are sloping
up.
Chances are we're in an uptrend.
So what you want to do now is to buy a coin and take advantage of the trend to make a profit and on
the other hand when the Magdaline crosses below the signal line and both line start sloping down.
This tells us that the price is going to drop soon.
So in this case we'll consider selling our coin and wait for an opportunity when the trend reverses
to buy a back at a lower price.
Easy right.
If you've mastered how to use the exponential moving averages this strategy is exactly the same.
But the interesting thing is the Mac can show faster buy and sell signals and the second strategy is
the Mac D line crossing above or below the 0 line.
When the Mac D line crosses above the zero line.
This shows us a stronger uptrend signal.
Do you know why it's because most of the time when the Mac D line is above the zero line that EMJ 9
is likely above the EMJ 50.
This shows us a stronger uptrend signal because that EMJ 50 can act as a dynamic support that helps
push the price up and vice versa.
When the Macchi line crosses below the zero line.
This shows us a stronger downtrend signal because in this case the EMI 9 is likely below that EMJ 50
so that EMJ 50 can act as a dynamic resistance that prevents the price from rising up.
If you still have no idea about how this strategy works and don't worry we'll dive into a lot of examples
in the next lecture.
OK now let's find out how to setup the Mac indicator to add the Mac D oscillator to the chart you simply
click on indicators and then type Mac D in the search box.
Now click on Mac D to added to the chart.
To change the settings of this indicator you can click on the gear button here.
Now click on the inputs tab
we'll use that EMJ 9 and EMJ 50 for calculating the Mac D.
The 9 day EMJ is a faster moving average and the 50 day is the slower one.
So we simply change the fast length to 9 and the slow length to 50 and then click OK.
After you do you'll find the Mac D oscillator at the bottom of the chart in the next video will go through
some examples so you can master how to use this indicator.