Depends on the timeframe one wants to hold. In this market I am a scalper, ending every day 100% in cash -- though I am beginning to watch for opportunities to develop longer-term positions in my IRA accounts, which is why I happened to be scanning weekly charts for MACD divergences and other promising signs.
Anyway, I'll assume that you are speaking of a buy signal for something longer than a daytrade. Along with many other traders, I have been preparing to trade on the long side of the widely-anticipated "Halloween Rally" -- the rally we often see that hinges on the October 31 deadline for fund managers to complete their tax-selling for the year. Since a well-defined MACD divergence often signals a strong run-up of several bars (or candlesticks), I'd be looking for a hold of several weeks. If all goes well, I'd consider holding longer, possibly extending the hold into next year for the "January Effect."
A buy-signal for such a hold would be different than a buy-signal for a daytrade or a swingtrade. So long as the MACD divergence remains in effect, I'd look next for a pullback to some kind of support on the daily chart. (A combination of moving-average support and price-support would be my personal preference.)
When I see that the first wave of profit-taking is coming to an end, when the price comes to some kind of support on the daily -- as signified by, for instance, a bull-flag -- I'd then shift down to viewing a shorter timeframe, such as the 15min intraday chart, and watch for some kind of intraday setup for my actual entry.
ig |
