I've read that MACD divergence is a good indicator of a change in trend. But I have a question. I often see a divergence on a small timeframe, say 5-15 minutes. But as I look at larger and larger timeframes, the divergence gets less and less and often a huge divergence on a 5 minute timeframe completely disappears on a 60m chart. So I'm wondering how to interpret this. In general a larger timeframe wins so does this means that one only looks for divergence on the larger (60m or daily) timeframes?
Question on MACD Divergence
- Thread starter cunparis
- Start date
look for the divergence on the timeframe you're trading.
If you're trading on 5 min charts and there's a divergence on the daily charts it probably won't be as much help to you.
If you're trading dailies and you see a divergence on a 1000 tick chart, it could be signaling something that will affect your daily charts, but probably not.
Of course if you see a divergence on both timeframes at the same time... then maybe it might be something big (or maybe not as sometimes divergences are false signals, too).
And don't forget, sometimes there are 3 or 4 divergences before the trend actually changes.
If you're trading on 5 min charts and there's a divergence on the daily charts it probably won't be as much help to you.
If you're trading dailies and you see a divergence on a 1000 tick chart, it could be signaling something that will affect your daily charts, but probably not.
Of course if you see a divergence on both timeframes at the same time... then maybe it might be something big (or maybe not as sometimes divergences are false signals, too).
And don't forget, sometimes there are 3 or 4 divergences before the trend actually changes.