Let's go
What is MACD
This is an indicator that helps you understand when the trend on a chart is changing. Its name sounds scary (Moving Average Convergence Divergence), but the idea is simple: it looks at how quickly the price is changing and gives a signal when it is time to buy or sell.
What does it look like:
- Two lines (MACD and signal) and a histogram (bars).
- The lines intersect, and that's the most important point.
It works like this:
- If the MACD line crosses the signal line from bottom to top, it is a buy signal (the price may start to rise).
- If from top to bottom - a signal to sell (the price may fall).
Example (❗️)
Imagine that the BTC price is falling, but then the MACD line crosses the signal line from the bottom up. This may mean that the trend is changing to growth.
It is worth paying attention to the fact that MACD is late. It shows trends a little later, so it may not be the fastest indicator for scalping.
It is better to use it together with other tools, for example, RSI.
Let's move on, what is RSI?
This is an indicator that shows whether people are buying or selling an asset too aggressively. If the price is already "overbought" or "oversold", a pullback is likely to begin soon.
What does it look like:
- This is the line at the bottom of the chart that moves between 0 and 100.
- There are two zones:
- Above 70: The asset is overbought, the price may start to fall.
- Below 30: The asset is oversold, the price may start to rise.
It works like this:
- If the RSI rises above 70, the market may be overheated and it is worth considering selling.
- If it falls below 30, the market is “tired” of selling, and you can expect growth.
Example (❗️)
The price of ETH has risen sharply and the RSI is showing 80. This is a signal that people are buying too much and a pullback may occur.
❗️❗️❗️What is the difference between MACD and RSI❗️❗️❗️
- MACD helps you understand where the trend is heading.
- RSI shows whether the asset has gone too far (overbought or oversold).
How to use them together?
The ideal is to combine both indicators.
1. Look at the MACD: if the lines cross, it could be a signal.
2. Check the RSI: is it in the overbought zone (above 70) or oversold (below 30).
Example strategy:
MACD lines crossed from bottom to top, and RSI is around 40 – you can think about buying.
MACD lines crossed from top to bottom and RSI is above 70 – time to sell.
Beginner mistakes:
1. Using indicators without understanding. They give signals, but do not guarantee profit.
2. Rely only on MACD or RSI. Always confirm signals in other ways (for example, by analyzing support and resistance levels).
3. Ignore the trend. If the market is going up, the RSI can be above 70 for a long time, and that's okay.
💡🔖MACD and RSI are tools that help you read the chart. They don’t predict the future, but they do give you useful clues. Just watch the MACD crossovers and RSI zones to make more informed decisions. With practice, you’ll start to notice how these lines really help!
