Day Trading - Momentum Day Trading

A MAC-D is another graph indicator that allows a day trader to have confirmation of a trend in order to have confidence in an entry point in a stock.

A MAC-D shows 2 moving averages to identify a trend. When one of the moving averages crosses the other there is a sign of a trend change. There is also a zero line which gives further indication to the direction of the trend.

Bullish Indicators in MAD-D

An indication that a stock is changing from a downward trend to an upward trend occurs when the shorter moving average line moves above the longer moving average line. This is an indication that the stock has turned bullish and will begin to reverse and rise.

If the 2 moving average lines move above the zero point on the MAC-D axis this is a further indication a stock is reversing a trend and beginning an upward trend.

Bearish Indicators in MAD-D

An indication that a stock is changing from an upward trend to a downward trend occurs when the shorter moving average line crosses below the longer moving average line. This is an indication that the stock has turned from a bullish trend to a bearish trend and will begin to reverse and fall.

If the moving average lines cross below zero also there is an even greater chance that the trend is about to reverse into a downward momentum.

MAC-D graph indicator setup should be:

Fast Bars = 12

Slow Bars = 26

Signal Bars = 9

In a candle graph.