When the stock price has experienced continuous rise or fall to hit a new high or a new low, and the DIFF line in the MACD indicator runs in the opposite direction to the index, it is the deviation of the MACD indicator, which is often a signal of trend change.
The following respectively illustrate the application of the top-bottom deviation of MACD indicators by taking the recent Shanghai Stock Exchange Index and Growth Enterprise Market Index as examples.
1. Weekly deviation of MACD indicator of Shanghai Composite Index
When the Shanghai Composite Index hit a new high, the DIFF line in the MACD indicator fell, which is called the MACD indicator top deviation, indicating that a wave of decline is about to happen.
Second, GEM refers to the deviation of MACD indicator at the bottom of the weekly line.
When the GEM index hits a new low, the DIFF line in the MACD index rises, which is called the bottom deviation of the MACD index, indicating that there will be a wave of rise soon.
MACD indicator can not only analyze the index, but also analyze the trend of individual stocks, which can be used at all time levels (minutes, hours, days, weeks, months, etc. As a trend indicator, MACD has a certain lag, and not every analysis can be 100% successful. If the technical methods such as BOLL line, KDJ, golden section, trend and time period are combined, the success rate of analysis can be greatly improved.