MACD divergence

[Kevin21]

Hey,
what exactly is a price divergence in a MACD indicator because i keep on coming across conflicting info. From people that i have spoken to who trade using a price divergence in the MACD indicator as one of their indicators, the positions they open saying that there is a divergence i fail to see... From what i learnt a price divergence can be seen in the MACD histogram, image is below. This is when the prices peaks, then makes a new higher peak, but the bars on MACD histogram fail to exceeded the high of the previous peak even tho its higher. What else qualifies as a divergences and what are the two lines for?


Many thanks

Kevin

 

[fibonelli]

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve

 

[Dinos]

MACD Divergence

Kevin, macd divergence, eg when green at a high and each bar falls toward the center line (and vice versa red ascending) is a divergence that suggests a change in direction of the price is pending, whilst this is falling the price may be going in the other direction, providing you an opportunity to get ready to enter a trade when other indicators fall in line.

Give stockchart.com a visit, look in their chart school, its good reference

 

[pirx]

Trading The MACD Divergence

One of the better articles out there