Hello Edward,
Currency Pair: EUR/USD
Time Frames: five mins and one hour
EMAs: 10, 25 and 50
MACD: 12, 26, 9 and 6, 13, 9.
My problem relates to the MACD line crossover the Signal line from above or below and establishes a BUY or SELL situation. However, I notice on many occasions the MACD/Signal line crossovers do not match up to the corresponding EMAs crossovers for the BUY or SELL entry simultaneously. Nevertheless, the candlestick charts of EMAs show the clearer picture of the discrepancy.
The discrepancy may be due to differences in indicator settings for respective time frames that you may have in record.
In this instance, which indicator should be used for the BUY or SELL decision? (Follow the crossovers or the MACD/Signal Line or EMAs).
In addition, if the EMAs crossover was the indication for entry, one has to wait for sometime (could be > 6 hours on 1-hour time frame) before the next EMAs crossover to happen for the exit, and meanwhile the MACD/Signal line had experienced a few earlier crossovers within that duration. Relying upon the prior MACD/Signal line crossover may lead to a pre-mature exit.
Finally, is there a relationship between the size of the MACD histogram with the volume of business transacted at that particular instance?
What are your views to a trading situation like this?
Thank you.
Regards.
George FXtrades.