Some traders regard MACD divergence as a Forex signal to enter a high probability trade. But centerline crossovers signals will be less frequent. The next chart shows 3M (MMM) with a bullish centerline crossover in late March 2009 and a bearish centerline crossover in early February 2010. A weakness of moving averages is that they lag the market, so they do not necessarily signal a change in trends.

Chart 4 shows Boeing with a classic slant divergence in the MACD-Histogram. Monitoring the MACD technical indicator in relation to price action reveals a few problems which could affect traders who rely on the MACD divergence tool. The MACD is just like any other indicators — it's NOT meant to be traded in isolation.

With respect to the MACD, when a bullish crossover (i.e., MACD line crosses above the signal line) occurs, yet the security's price declines, this is referred to as a false positive”. A bullish centerline crossover occurs when the MACD Line moves above the zero line to turn positive.

A couple of Sell” signals have been circled when both lines are above the zero line and the MACD has crossed below the signal line. Though the prices are making higher highs, the indicator can give a sell signal in during a correction. Similarly, in a bear trend the indicator can give a buy signal during a rally.

They MACD Indicator can look for the MACD (blue line) to cross above or below the Signal (red line) to give buy and sell signals respectively. An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points.

A transform from positive to negative MACD is interpreted as bearish”, and from negative to positive MACD is interpreted as bullish”. The signal will be more reliable when in case of the intersection of lines there is the histogram peak (on sale), and on purchase - a minimum.

MACD Convergence is also a famous signal, but people trust the MACD Divergence more because when the market collapses and goes down, it goes faster and stronger. When price is making higher highs and higher lows and MACD is making lower highs and lower lows, a trend reversal is generated.