Indicator - MACD Divergences
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Definition MACD Divergences
This indicator detects bullish and bearish divergences between price and the MACD.
A bullish divergence occurs when the stock price makes new lows while the indicator starts to climb upward.
A bearish divergence occurs when the stock price makes new highs while the indicator starts to go lower.
Interpretation MACD Divergences
The divergences indicate a slowdown of the current trend and a probability of a reversal.
If a bullish divergence is detected this indicator returns +1 (green histogram).
If a bearish divergence is detected, the indicator returns -1 (red histogram).
If no divergence is detected, the indicator returns 0.
If looking at a price chart, a MACD chart and a MACD divergence chart, make sure that you have set the parameters of the MACD and MACD divergence to the same levels (ex: 12, 26, 9).
