1 on 1: - Rob Booker

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The histogram can be used to show divergences (in depth lesson later) A divergence is meant to show a losing of momentum. Here we have a lower high on the price chart is followed by a higher high, while at the same time the histogram is showing a higher high followed by a lower high. This is a bearish divergence. It shows that while price manages to creep higher, it does so with less enthusiasm than when the move started and we can expect a retracement of some kind. As we can see on the right side, a retracement is exactly what happened. 9
10 I made a couple little step doohickies on the histogram to show what a rollover and rollup might look like. The blue one showing a rollover. The green one showing a rollup. Here is a powerful way to use the MACD: When the histogram makes a peak, it starts to print progressively lower bars. When you see a nice MACD rally upward followed by 2 or 3 declining bars, you are looking at the first sign of a “rollover”. This is a bearish signal. We call it a rollover because the MACD is rolling over, as a ball might roll over a hill. It is very quick to give a signal, and therefore is prone to whipsaws. To avoid whipsaws, it’s a good idea to add a couple extra criteria. An overbought/Oversold indicator would help (like Stochastic, RSI, or CCI). Trend
Page 1 and 2: 1 on 1: MACD © 2004 W. R. Booker I
Page 3 and 4: These are the Exponential Moving Av
Page 5 and 6: Here you see the points where the E
Page 7 and 8: 6 The next element of the whole MAC
Page 9: 8 The final piece of the MACD indic

1 on 1: - Rob Booker

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