Stochastic, MACD, Bollinger Bands Plus Day And Swing Traders

Learn How To Day And Swing Trade Using Stochastic, MACD, Bollinger Bands Like A Pro

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CISCO chart with MACD




The chart on the left hand side demonstrates that when MACD

(12,26,9) is above its signal line, the price is also above the

moving average twenty.

In our view, this correlation is true quite often; unless there is

a distortion or MACD fails to catch up with the price.

The chart displays CISCO's weekly chart with a green simple

moving average 20 and the standard Moving Average

Convergence Divergence (12,26,9). 



Intel's weekly chart and MACD


The adjacent chart highlights the correlation between MACD

and a trend line. When the oscillator crosses below its signal line,

the price will also dip below the rising trend line.

Conversely, if the indicator rises above its signal line, the price

will also rise above the declining trend line.

In theory, one can substitute MACD's signal line crossovers with

a trend line crossovers.

One may also notice that the primary trend line substitutes for

the moving average twenty.

The chart exhibits Intel's weekly chart with a declining trend

line (black), a rising trend line (red), a green moving average

20 and a MACD indicator.


Bank of America's weekly chart and MACD


The chart on the left hand side confirms the correlation between

a rising channel and the Moving Average Convergence Divergence

(when it is above the zero line).

When the indicator is above the zero line for a considerable amount

of time, the price is also in a rising channel.  Distortions do take place,

but in normal conditions, this relationship remains in place.

The market is dynamic.  Traders must not apply these findings

without understanding what is taking place.

The chart reveals a (BAC) weekly chart, a pink rising channel

and MACD above a green zero line.


Weekly chart Boeing and MACD


The adjacent chart exposes the correlation between the moving

average 50 and the zero line.

In an efficeient market, the price stays above the rising average

50 as long as MACD remains above the zero line.  Take a minite

to check the chart.  Notice the yellow rising moving average

and the oscillator (rising above its equilibrium line).

You may check Trading MACD for more details.

The chart shows the moving average convergence divergence

(12,26,9), the simple moving average 50 and a (BA) weekly chart.


Weekly chart ALCOA (AA) and MACD


By looking at the chart on the left hand side, traders will notice the


1/ Alcoa (AA) stock was declining in a bearish channel.

2/ and MACD was sloping down below the water line (zero line).

Traders will recognize that this is the opposite of what we have

discussed in chart 3 (Bank of America's weekly chart and MACD).

The price will ride in a negative slope channel as long as the

indicator is bearish below the water line.


Three days chart (DIS) and MACD




This is the direct opposite of chart 4 (weekly chart Boeing and MACD).

Notice that the price is below the declining moving average 50

(coloured yellow) when the technical indicator is declining below

the equilibrium line.

One may compare chart 4 and chart 6.

The adjacent chart is a Disney stock's three-days-chart with a

yellow declining average fifty and a bearish MACD oscillator

(below the zero line).


3Days-Chart (UNH) and MACD


One will notice on the adjacent chart:

1/ a yellow zero slope moving average 50 (horizontal),

2/ horizontal channel,

3/ MACD oscillating aroung the zero line,

4/ and the United Health Group Inc's (UNH) three-days-chart.

When the moving average 50 is not sloping at all, it indicates

a balanced market or a low volatility market.

The price will oscillate between a specific support level and resistance. 

The technical oscillator will stay horizontal or move up and

down around the zero line.

This phenomenon precedes a breakout or a breakdown but does

not always lead to them.


Three-Days-Chart IBM and MACD


The story about the adjacent chart

This three days chart shows that IBM stock was above the rising

trend line for some times.  Notice how the technical oscillator started to

decline while the price was still above the trend line.  Though, this trading

tool is a lagging tool, it fired a leading signal. 

Remember that the price must validate all signals.

Now the price dropped below the rising trend line.

Many traders will sell at this point but this is not a safe way to sell. 

The validation takes place when the trend line becomes a resistance. 

The best approach is to allow the price to

1/ beak below the rising trend line,

2/ rally up and retest the trend line,

3/ and turn around at the retest point (or Hot Spot Trading Zone or

HSTZ) where the validation occurs.


MRK stock 3 days-chart and MACD


This is chart 9.  It is highlights the opposite of chart chart 8.  Please,

feel free to comapare chart 8 and chart 9. 

Macd was rising for a while but the price was still below the declining

channel.  Many traders who are trading the technical oscillator instead

of the price may get into trouble if they buy right away. 

Notice how patient traders who followed the three steps (BREAK ABOVE,

RETEST AND TURN AROUND) entered the trade at a low risk entry point.





1/ It does not use the standard MACD (12,26,9),

but a different MACD.

2/ It uses a specific Bollinger bands.

3/ It is not a software or a trading robot, but a trading system.

4/ It is a trading system for traders who are willing to learn,

understand and know when to buy or sell without fear.

If this is you, click on the picture

to find out more


Trading with charts