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The Traditional MACD Oscillator is used to evaluate price momentum and identify entry and exit points in trading. This classic version of MACD displays the histogram and incorporates two Exponential Moving Averages (EMA).
The trading signals of this MT5 oscillator are primarily generated through divergences and the relative positioning of moving averages to the histogram.
Specifications of the Traditional MACD Indicator
The key features of the Traditional MACD Oscillator are outlined in the following table:
| Category | Oscillator - Signal & Forecast - Currency Strength |
| Platform | MetaTrader 5 |
| Skill Level | Beginner |
| Indicator Type | Reversal - Leading |
| Time Frame | Multi-Timeframe |
| Trading Style | Scalping - Day Trading - Intraday Trading |
| Markets | Forex - Cryptocurrencies – Indices |
Buy Signal
According to the EUR/USD 30-minute chart, the divergence between candlesticks and the MACD histogram is highlighted using indicator lines.
As observed, the histogram prints higher lows while the price forms lower lows. Additionally, the moving averages cross above the histogram and oscillate in the positive zone, confirming a bullish signal.
Sell Signal
Based on the NZD/USD 15-minute chart analysis, the price forms a higher high, while the histogram prints a lower high.
Additionally, the moving averages position themselves below the histogram. This divergence between the indicator and price is a sell signal for short positions.
Traditional MACD Indicator Settings
The following parameters define the Traditional MACD Indicator settings:
- FAST_EMA: Defines the period for fast-moving average calculations
- SLOW_EMA: Defines the period for slow-moving average calculations
- SIGNAL: Determines the signal line calculations
- LOOKBACK_LIMIT: Sets the number of past candlesticks used for calculations
- DIVERGENCE_LINES: Enables the display of divergence lines on the chart
Conclusion
The Traditional MACD Indicator is designed to identify divergences, trend reversals, and optimal trade entry points.
This MT5 Signal and Forecast indicator highlights hidden divergences between candlesticks and histograms and tracks trend direction changes using moving average lines.
What is the Traditional MACD Indicator?
The Traditional MACD Indicator is a technical analysis oscillator for identifying trend direction, momentum, and trading signals.
What are the main components of the Traditional MACD Indicator?
The Traditional MACD Indicator comprises the Fast Exponential Moving Average (Fast EMA), Slow Exponential Moving Average (Slow EMA), Signal Line, and Histogram for analyzing market trends and momentum.