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TA Challenge: How do you identify trends with moving averages?
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Kennethz36 joined discussion · Mar 15, 2022 05:11

My thoughts about MACD

Hi guys!

MACD is one of the most commonly used technical indicators, and the most useful one in my mind.

You can see that there are two different colored lines below, DIF and DEA.
My thoughts about MACD

The DIF reflects the change in the stock price over a period of time. (DIF = 12DAYS - 26DAYS).

DEA can be interpreted as the average of DIF. (DEA = DIF / 9DAYS).

Also, DIF will react faster, while DEA will be slower.
My thoughts about MACD

As shown above, $Palantir(PLTR.US)$ has a funny phenomenon in November 2021, when the DIF slips and crosses the DEA. After this, PLTR's stock price started to decline significantly.

It is important to note that the MACD does not immediately react or predict stock price movements. There is an unavoidable delay (a bitter experience of mine). The MACD requires a combination of your understanding of the stock and the current market sentiment.

For me, MACD would be one of the best tools for long-term investing
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Kennethz36
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