MACD True Indicator
MACD True is an enhanced for of traditional MACD indicator. It helps to recognize trend reversals. You can use it as a sole trading strategy.

CATEGORIES: MT4, INFORMATIONAL
Updated on: 09.12.2023

The MACD (moving averages convergence divergence) True indicator is a momentum trend-following indicator that displays the relationship between the two MAs (moving averages).

Traders can use the MACD True indicator in conjunction with any forex trading system or strategy to confirm entry and exit points.

In this guide, we will analyze the nuances and peculiarities of trading with the MACD True Indicator.

What is the MACD True indicator?
Gerald Appel devised the MACD indicator in the late 1970s. The MACD indicator aims to show changes in the current market’s strength, momentum, and direction.

To predict MACD crossovers, Thomas Aspray added a bar graph or “histogram” to the indicator in 1986. For technical traders who use the MACD indicator, this became the industry standard.

However, the default MACD indicator in MetaTrader 4 does not employ Appel and Aspray’s classic formula. This might be puzzling for traders, especially if they are not familiar with the forex market.

Fortunately, MACD True indicator lets you solve the problem and use Appel and Aspray’s traditional formula.

It takes some part of the traditional MACD and adds a twist with its additional signal line. This signal line helps you determine the overall price trend.

A lot of traders think that the MACD True Indicator is similar to the RSI. However, this is not the case.

The MACD True indicator evaluates the relationship between two moving averages (EMAs), whereas the RSI measures price change concerning recent price highs and lows.

These indicators indicate market momentum, but because they measure distinct parameters, they can occasionally produce contradictory results.

For example, the RSI may display a reading above 70 for a lengthy period, indicating that the market is tilting to the buy side about current prices. Yet, the MACD True indicator suggests that the market’s buying momentum is still building.