MACD This stands for Moving Average Convergence Divergence. It has three ways it can give a buy or sell signal. It can give buy signals in an up trend when the lines cross each other and turn upward (green boxes). It can give sell signals in a downtrend when the lines cross and head lower (red box). You can also get a buy signal as the MACD lines rise upward above the zero line (yellow box on the left) and you can also get a MACD sell signal when the lines head downward below the zero line (yellow box on the right).
(Note: Only take MACD buy signals when the stock is in an up trend. Take sell signals only when the stock is in a downtrend. When the stock price is stuck in a range, you can take buy signals when the lines cross and turn upward and sell signals when the lines cross and turn downward.) The final way you can get a signal from the MACD is by divergences between the actual price and the indicator (blue lines). Notice the MACD starts to have lower highs, yet the price action just levels off. This can be a powerful tipping of the hand of things to come once the price confirms this by breaking down below its trend line.
The most common period used on the MACD is 12,26 and 9 (all used together and in that order).
Slow Stochastics Slow Stochastics were only designed to be used when a stock is stuck in a sideways range. It loses its effectiveness when the stock starts to trend. However, if you take a signal while in a trend, make sure that it is only the signal that is already in line with the trend. Here is how the stochastic should be used: Buy (green boxes) when the lines cross below 20 AND come back up above 20. Sell (red boxes) when the lines cross above 80 AND drop back down below 80. Notice its best to also use this in conjunction with support and resistance areas. This will help refine your entries and exits.
The most common period used is 14,5 or 14,3 (also referred to as 14,5,5 and 14,3,3).
