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The MACD Zero line indicator combines the two possible interpretations of the classic MACD into one, single signal. This combined MACD interpretation is used by day traders such as Tobias Heitkötter.
The advantages of this indicator:
MACD is the abbreviation for Moving Average Convergence Divergence. This trend-following indicator tracks the relationship between two moving averages of an instrument. This relationship results in the MACD line. This line is usually shown in a separate window below the chart. As the moving averages converge or diverge, the MACD line fluctuates above and below zero. Usually, a moving average based on the MACD itself is also calculated and displayed. This line, which indicates when the trend changes, is used as a signal line.
The two classic MACD interpretations are therefore:
The MACD Zero line combines the two traditional MACD interpretations in one trading signal. The conditions for a trading signal are:
This example shows the MACD zero line indicator. The background is coloured in green (long signal) or red (short sell) when both conditions are met.
This screenshot is a close up of the MACD Zero line indicator. The coloured chart backgrounds indicate bullish and bearish markets, during which the two traditional MACD interpretations are both bullish or both bearish. This is an interesting indicator, which merits traders' attention.
Open the chart of an instrument. In the WHS Proposals folder, select the MACD Zero line indicator.