MechanicalMethod: MACD is made up of two lines. One, the fast line, is the shorter-term MA (e.g., 21) minus the longer-term MA (e.g., 34). The other, the signal line, is a smoothed version of the fast line, an EMA of the fast line. You just take that fast line and plot its 5-day EMA (e.g., with 21/34/5) to get the signal line. The difference between these two lines is the histogram, which Chris didn't include in his chart.
As to the best signals, who can say? It depends what you're looking for, your time frame, your trading style, etc. There are as many ways to approach it as there are twists and turns in the plots. I tend to focus on the histogram, but I found Chris' chart without the histogram revealing. |
