Moving averages are among the most widely used indicators in technical analysis. They come in various sizes, shapes and forms, as the previous article in this series explained, and they are used many different ways. Perhaps the most useful is Moving Average Convergence-Divergence, better known as MACD, which uses three exponential moving averages (EMAs). It can be used for various time periods, but some traders find it most useful on daily and weekly charts as an indicator of trend continuation or reversal.

By Fernando Gonzalez, one of the original founding members of Online Trading Academy*
Posted: March 28, 2008

My most vulnerable state as a trader is when I think I have figured out the markets. Such a state is even more distinct when I am deep into a long winning streak. Although I can usually get my trading direction right and can have a pretty wide imagination as to how far the market can go in any one period of time, the market has taught me over time that reality can often eclipse the imagination. On top of its common propensity for reversing direction suddenly, it also has an awesome way of going higher and lower than I can imagine it could go before the turn.