Recently, the CME April 22' Micro Bitcoin Futures contract witnessed a positive MACD divergence.
The low on April 11 was repeated on April 12 (Shown with green arrows).
However, the MACD (Moving Average Convergence Divergence) was higher on at the same price level on April 12, than it was on April 11. This is called positive divergence.
The 12 period (in this case 30m) EMA began to gain strength vs the 26 period (again 30m) EMA, as the futures were weakening. This is a signal that the downtrend may be changing.
The trade was initiated after resistance was broken, denoted by the green horizontal line. Here you had a break out above resistance, combined with the strengthening MACD.
$42,300 is the next logical target, with $44,000 being the final target, as it was previous resistance.
MACD Education:
Developed by Gerald Appel in the late 1970’s
Useful in trending markets because it is unbounded
MACD Line = (12 period EMA - 26 period EMA)
Signal Line = 9 period EMA of MACD Line
MACD Histogram = MACD Line - Signal Line
Convergence occurs when the MA move towards each other.
Divergence occurs when the MA move away from each other.
Typically the 26 and 12 period EMA are used
Oscillates above and below 0
When MACD is positive, the shorter average is above the longer term average
Signals when it crosses from below to above the signal line
Histogram was developed by Thomas Aspray in 1986
Signals MACD above or below signal line
The low on April 11 was repeated on April 12 (Shown with green arrows).
However, the MACD (Moving Average Convergence Divergence) was higher on at the same price level on April 12, than it was on April 11. This is called positive divergence.
The 12 period (in this case 30m) EMA began to gain strength vs the 26 period (again 30m) EMA, as the futures were weakening. This is a signal that the downtrend may be changing.
The trade was initiated after resistance was broken, denoted by the green horizontal line. Here you had a break out above resistance, combined with the strengthening MACD.
$42,300 is the next logical target, with $44,000 being the final target, as it was previous resistance.
MACD Education:
Developed by Gerald Appel in the late 1970’s
Useful in trending markets because it is unbounded
MACD Line = (12 period EMA - 26 period EMA)
Signal Line = 9 period EMA of MACD Line
MACD Histogram = MACD Line - Signal Line
Convergence occurs when the MA move towards each other.
Divergence occurs when the MA move away from each other.
Typically the 26 and 12 period EMA are used
Oscillates above and below 0
When MACD is positive, the shorter average is above the longer term average
Signals when it crosses from below to above the signal line
Histogram was developed by Thomas Aspray in 1986
Signals MACD above or below signal line