Knowing the right time to buy or sell a particular cryptocurrency is cogent in becoming a successful crypto trader. Fundamental Analysis (FA) coupled with the right Technical Analysis(TA) tool will help you determine the best time/price to enter and exit a trade.
Out of all the TA tools available, the Moving Averages Convergence and Divergence(MACD) Indicator stands out because it’s easy to use and interpret.
Constructing the MACD
There are three main components to the MACD indicator: the MACD line (blue oscillator), the signal line (orange oscillator) and the histogram.
Two Method to Interpret the MACD
When the MACD crosses above the signal line, it is known as a bullish cross and when it crosses below, its known as a bearish cross. The crosses indicate a shift in trend momentum and represent buy or sell signals depending on the type of cross.
Overbought and Oversold
The MACD can also identify overbought or oversold market conditions. This conditions are presented when the MACD and signal line separate too far away from both one another as well as the zero line.
Watch the video above for more detailed explanation and drop your suggestions in the comment box below.