Here's a screen shot of a refined MACD signal line using 60 minute bars. On the top price chart the 8 and 16 MAs and the parabolics are displayed.
We know the 7/14 EMAs work best for the Qs, but this is GE and the default 8/16s work better here. It's important to identify the "pulse" for each stock or ETF that you trade, which can be a time consuming endeavor and which is one big reason why I trade only a limited basket of stocks/ETFs that I've carefully studied and backtested.
The mid panel contains:
MACD histogram with classic 12,26,9 settings.
MACD 3,16
MACD 5,20
And SMAs of 3 and 7
Note how SMAs crosses of the MACDs have produced nice trend trade triggers and kept you on the right side of the market when a smaller time frame view would have kicked you out.
An important screen to monitor on an hourly basis in conjunction with the NYAD if only to track on-going daily momentum.
4 comments:
Just to be clear....the SMAs are SMas on Price or SMAs on MACD ?
Thanks
R,
Excellent question!
For today's 60 minute chart the SMAs are of the price.
For the weekly update charts (daily bars)in Telechart, the mid-panel SMAs are of the MACD.
I am still trying to figure out this chart setup. When i reproduce on my chart package, the SMAs and MACDs have different scalings. Are you normalising your scales at all and if so how ?
Thanks
R,
I don't know what chart package you're using so it's hard to comment. I'm just using the default Schwab indicators. The histogram is zero line based. By stuffing the MACDs and 3/7 SMAs into the midpanel, the display scale is compressed. I get the same relation of the the MACDs and SMAs if I display on top of the upper candles, but the range is much expnaded (and cluttered).
Hope that helps.
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