By Russ Horn
By the Author : The tool we use to help determine whether or not the second divergence setup will work out is the MACD, more specifically, the MACD Line.
The MACD Histogram is a very sensitive tool; it can very easily see the weakness in the market and will clearly point out the potential trade setup. Unfortunately, in a stronger trend, this weakness is very temporary and may not result in a profitable trade.
The MACD Line, on the other hand, is a less sensitive. When the MACD Line shows divergence, it carries a little more weight.
Just a quick MACD recap:
The MACD that we use in the Forex Master Method system is composed of:
– MACD Line (thick blue line on the image below)
– Signal Line (thinner red line in the image below)
– MACD Histogram (red and green bars – this shows us the gap between the MACD Line and its signal line)
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