macd/daily

Which one is correct indicator? popular macd12,26,9 or daily ema 12,26,9 ?



http://stockcharts.com/h-sc/ui?s=$SPX...id=p90831546143



http://stockcharts.c...g_average_conve

Edited by vitaminm, 20 March 2008 - 02:30 PM.

If you look closely at the description in your second link, the MACD line is computed on the 12EMA and 26EMA moving averages of price. So both MACD and EMA are valid indicators. The most important thing about the MACD is correctly interupting the various phases of MACD. For instance, - MACD positive, MACD signal positive, MACD histogram positive or negative, histogrm higher or lower than the prior day (very bullish) - MACD positive, MACD signal positive, MACD histogram negative, MACD histogram higher than the prior day (bullish) - MACD positive, MACD signal positive, MACD histogram negative, MACD histogram lower than the prior day (bearish) - MACD negative, MACD signal negative, MACD histogram negative, MACD histogram higher than the prior day (bullish) But trading on these signals alone will lead to whipsaw. I trade on these signals, but combined with stochastics in multiple timeframes, with settings appropriate for each phase of the daily MACD. PPO print, as you can see, is very similar looking to the MACD. That's because its the same calculation, but normalized to price. I only use the PPO to gage the price momemtum in a severe correction. When PPO histogram is too negative, like this past January, for my swing trades, risk is too high.