JDFN Financial Network

MACD

Hi all,

I'd like your opinion on placing trades when divergence occurs. Looking at a daily chart the MACD is converging with trend. Same applies when looking at hourly charts of the same currency. However when looking at 15 minute charts the MACD is actually diverging and gets worse when you go down to 5 minute charts

So my question is would you enter a trade when the above scenario occurs or should you wait until MACD converges across multiple timeframes?

 

I am Confused (or maybe just confusing myself)

Karim

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Permalink Reply by Caroline Carlin on July 20, 2011 at 12:27pm

Hello Karim,

In my opinion, unless scalping or trading very short timeframes, I wouldn't take into account anything below 1 hour charts, and yes, if there is convergence across multiple timeframes much better, at least two of them (h1 and h4 if daytrading) and include daily if expecting a longer term trade.

The smaller the time frame, the shorter the time span in which convergence or divergence develops and those are usually less dependable.

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