Hi everyone and welcome back to this wealthy education technical analysis course today we're going to
be talking about the moving average convergence divergence or the Mac the the Mac D is a type of exponential
moving average it subtracts the 12 day exponential moving average from the 26 day exponential moving
average to get one line which is the Mac the line and then it combines this with a nine day exponential
moving average as well as a zero line that the McIntee and the nine day IIM-A can cross above and below
a cross by the Mac D above the nine day line.
As bullish and a cross by the Mac the below the nine day line is Barish across above the zero line is
Balazs and across below the zero line is Barish the crossing the zero line is less important than the
Mac the crossing the nine day line.
When the stock price moves higher as the McIntee moves lower we have a divergence and this is a negative
divergence.
When the stock price is moving lower and the Mac D is moving higher then we have a positive divergence
a negative divergence tells us that the stock may cease to move higher and either turn down or move
into a consolidation pattern and a positive divergence tells us that the stock may cease to move lower
and move into a consolidation pattern or possibly move higher Cross and the Mac the often indicates
a trend change especially if the Mac D is in a bullish position well above the zero line and then crosses
the nine day to the downside.
This may indicate that a bullish trend is becoming bearish.
And just the opposite in a bearish trend.
If the Mac D is extremely oversold and the Mac then crosses the nine day to the upside.
This may indicate that the bearish trend is turning bullish or at a minimum turning into a consolidation
pattern.
So let's take a look at the mac daddy on a chart.
Let's use a chart of ExxonMobil exo elm on a daily basis to look at them acting sort wanting to click
on indicators type pen or a CD for them at the click the MAC DE close this box and then we have the
Mac D at the bottom of the screen.
The center line is the zero line for the Mac D and the blue line is the Mac D line and the red line
is our 9 period DMA.
Let's start at the beginning of the chart we have the Mac and the in bullish territory but the zero
line trending up.
And then we get a cross of the Mac the
here actually before the stock dropped off.
So we had a cross of the Mac D which is in overbought territory at this point to the downside.
And then the stock drops.
So with this cross we may have sold our position or at a minimum tightened our stops and been prepared
for a reversal in trend from a bull trend to at a minimum a consolidation pattern.
But the stock actually went into a bear trend.
The Mac the drops along with the stock and then we get another crossover of the Mac the
and this is a bullish cross of our blue Mac.
The line above the red nine day line.
We get a short rally in the stock but then the stock continues down.
Here as the Mac the continues up.
So this is a bullish divergence in the math.
The we have the price of the stock dropping the price of ExxonMobil dropping and the Mac the rising.
So this should tell us if we're short the stock to tighten our stops.
And possibly look for an exit of our short and prepare to go long.
The Macchi crosses the zero line which is bullish the stock moves up.
We then have the McIntee continuing in bullish territory.
It's above the zero line across here.
Back below the zero line.
The stock continued to move up as the Mac was in bullish territory and as the Mac moved below zero where
the stock coming back down and breaking the support level
then we having another buy signal and the Mac the
which is an oversold but not an extreme oversold position as it was back in February.
So with this buy signal if we have taken a short position here we'd be ready to exit that position.
And perhaps ready to go long.
And the stock had almost touched a major support level here dating back to May.
So I have a major support level combined with a buy signal in the Mac the which again would have us
exiting our short position and possibly taking a long position to be confirmed by crossing the zero
line and early September and the stock continued up from the 80 dollar level.
Around the $87 level we had another cell signal on our Mac the which was overbought at this point.
So this cell signal would have told us to tighten up our stops and then we see the stock fall off again.
And now we're in a buy signal in the Mac right now.
So that's the McIntee combined with support air resistance and the stock of ExxonMobil.
Thank you for watching this video on the Mac D or the moving average convergence divergence indicator.
And our next video we're on to talk about the relative strength index I look forward to seeing you in
the next video.