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Divergence
The following combinations of parameters were used to study MACD for HDFC
bank.
Combination
Combination 1
Combination 2
Combination 3
Combination 4
Description
Simple moving
average with
price (MA26 Vs
Price)
Simple moving
averages (MA26
Vs MA50)
Simple moving
averages (MA26
Vs MA12)
Exponential
moving averages
(MACD: EMA12EMA26, Signal
Line: EMA9)
Outcome
Reasonable
accuracy
Delayed response
(could not predict
price trends)
Delayed response of
cross-overs but
convergencedivergence might
predict
Good predictability
Suggested
action
No action
suggested
Buy
Buy
Buy
Combination 1:
Software/Website used: Chartink
MACD MA26 (moving avg) against stock prices
The graph below comprises of data past 2013. It clearly shows that MA26 with
the price line indicates trends at cross-over points. However in the boxed area
owing to frequent cross-overs, prediction of trends is difficult.
Combination 2:
Software/Website used: Chartink
MACD MA26 Vs MA50 (moving avg)
At all cross-over points, there has been a clear indication of trends. However
certain cross-over points appeared late (could not predict the price refer figure
below)
Also when MA26 begins to diverge from MA50, the stock surges as per data from
past two years.
Cross-over
occurred
after stock
price
surged
Combination 3:
Software/Website used: Chartink
Combination 4:
Software/Website used: BSE MS Silverlight
MACD Line EMA26 & EMA12 (Exponential)
Signal Line EMA9 (Exponential)
Stock
Price
Volume
MACD Vs
Signal Line
Stock
Price
Volume
MACD Vs
Signal Line
Cross-over Points Whenever the MACD line and signal line cross-over, a
change in trend is observed. Some of them have been highlighted below. In most
of the cases below, a cross-over between MACD & signal line has happened
along with a peak or trough in MACD. In situations when both the indicators
appear consequently, a clear reversal of trend can be predicted.
Stock
Price
Volume
MACD Vs
Signal Line