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Weekly & Daily MACD
Weekly & Daily MACD
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Stocks & Commodities V. 35:12 (10–15, 41): Weekly & Daily MACD by Vitali Apirine
T
For W&D MACD.”
he indicator I’ll discuss in this article, the In Figure 1 you see an example of a chart with the
weekly & daily MACD (W&D MACD), weekly & daily MACD indicators in the upper panel.
combines (as you may have guessed) weekly Notice the W&D MACD consists of two oscillators.
and daily MACD oscillators on a daily chart. Each The weekly MACD oscillates above and below the
oscillator turns two moving averages into a momentum zero line (centerline). These crossovers signal the
oscillator by subtracting the longer moving average 60-day EMA crossing the 130-day EMA. The direc-
from the shorter moving average. Traders can look tion depends on the direction of the moving average
for relative daily MACD line crossovers, weekly cross. Positive weekly MACD indicates the 60-day
and daily centerline crossovers, and divergences to EMA is above the 130-day EMA. Positive values
generate trading signals. Because the W&D MACD increase as the shorter EMA diverges further from
is not bounded, it is not particularly useful for iden- the longer EMA.
tifying overbought and oversold levels. Here’s how Negative weekly MACD values indicate the 60-day
you calculate it. EMA is below the 130-day EMA. Negative values
increase as the shorter EMA diverges further below
Calculation the longer EMA.
1. Multiply daily exponential moving aver- The relative daily MACD fluctuates above
age (EMA) lengths by 5 (five days per
week) to get weekly EMAs.
12-day EMA * 5 = 60-day EMA = 12-week Relative
Daily MACD
EMA Weekly
MACD
26-day EMA * 5 = 130-day EMA = 26-week
EMA
4. Relative daily MACD line: FIGURE 1: Weekly & Daily MACD indicators. The weekly & daily MACD
Weekly MACD line + Daily MACD line indicators are displayed in the upper panel. Notice the W&D MACD consists of two
oscillators. The weekly MACD oscillates above and below the zero line (centerline)
and the relative daily MACD fluctuates above and below the weekly MACD line.
by Vitali Apirine
Figure 2: a strong uptrend. On this chart, you see a bullish relative daily MACD FIGURE 3: A STRONG DOWNTREND. Here you see four relative daily MACD line cross-
line crossover in early September 2010 and a bearish relative daily MACD line crossover overs in seven months. The weekly MACD line was negative and dropped, except from
in mid-March 2011. This bullish signal lasted seven months. Notice the weekly MACD second half of August to the first half of September.
line rose most of the time.
and below the weekly MACD line. The relative daily The relative daily MACD is faster. The weekly MACD line
MACD crossover signals the 12-day EMA has crossed the 26- is slower and less reactive to price changes in the underlying
day EMA. The direction depends on the direction of the moving security.
average’s cross. The relative daily MACD is positive when it is
above the zero line. The relative daily MACD is negative when Relative daily MACD line crossovers
it is below the zero line. A bullish crossover occurs when the relative daily MACD line
When the relative daily MACD is below the weekly MACD turns up and crosses above the weekly MACD line. This hap-
but above the zero line, it means daily downside momentum pens when the 12-day EMA of the underlying security moves
outpaces daily upside momentum, but there is less weekly upside above the 26-day EMA. A bearish crossover occurs when the
momentum. So, positive difference between 60-day and 130- relative daily MACD line turns down and crosses below the
day EMA is greater than negative difference between 12-day weekly MACD line. This happens when the 12-day EMA moves
EMA and 26-day EMA. If the relative daily MACD is below below the 26-day EMA. Crossovers can last a few days or a few
the zero line (negative) and weekly MACD is above the zero weeks. It depends on the strength of the move.
line (positive), it indicates a whipsaw in the daily MACD or a The chart in Figure 2 shows NYSE Composite index (NYA)
signal of a future change of weekly momentum. If the weekly with a bullish relative daily MACD line crossover in early Sep-
MACD is above the zero line and relative daily MACD is above tember 2010 and a bearish relative daily MACD line crossover
the weekly MACD, it indicates weekly upside momentum and in mid-March 2011. This bullish signal lasted seven months.
daily upside momentum outpacing weekly downside momentum It indicates that the 12-day EMA was above the 26-day EMA.
and daily downside momentum, respectively. The most profit- Weekly MACD line became positive at the end of September
able long trade occurs when the weekly MACD and relative 2010 (60-day EMA crossed above 130-day EMA). Notice the
daily MACD rise together. weekly MACD line rose most of the time. This was one strong
When the relative daily MACD is above the weekly MACD uptrend.
but below the zero line, it means daily upside momentum out- In Figure 3 is a chart of London Financial Times index (FTSE
paces daily downside momentum, but it is less weekly downside 100) with four relative daily MACD line crossovers in seven
momentum. In other words, a negative difference between 60- months. The weekly MACD line was negative and dropped,
day EMA and 130-day EMA is greater than positive difference
between 12-day EMA and 26-day EMA. If the relative daily
MACD is above the zero line (positive) and the weekly MACD is
below the zero line (negative), it is possible that the daily MACD
did whipsaw or signaled future change of weekly momentum. If The most profitable long
the weekly MACD is below the zero line and the relative daily trade occurs when the weekly
MACD is below the weekly MACD, it indicates both weekly MACD and relative daily MACD
downside momentum and daily downside momentum outpace
weekly upside momentum and daily upside momentum, respec- rise together.
tively. The most profitable short trade occurs when the weekly
MACD and relative daily MACD drop together.
except from the second half of August to the first half of Sep-
Compare Daily MACD Centerline Crossovers with Relative Daily MACD Line Crossovers
tember. The bearish crossovers worked well because this was
resistance break one strong downtrend.
but the lower high in the weekly W&D MACD line shows less
higher high weekly upside momentum.
In Figure 9 you see a chart of the S&P 500 index (SPX) with
a weekly bearish divergence from July to October 2007. Weekly
W&D MACD formed a lower high as the index formed a higher
support break high in October. The weekly W&D MACD turned down with a
weekly centerline crossover at the end of December. SPX con-
firmed a reversal with support breakout in early January 2008.
The chart in Figure 10 shows a bullish divergence from
FIGURE 9: weekly bearish divergence. Weekly W&D MACD formed a lower high
November 2008 to March 2009 in the Dow Jones Industrial
as the index formed a higher high in October. The weekly W&D MACD turned down with Average (DJIA) during a bear market. The index forged a lower
a weekly centerline crossover at the end of December. SPX confirmed a reversal with low but the weekly W&D MACD formed a higher low. The
support breakout in early January 2008. subsequent weekly W&D MACD centerline crossover and DJIA
resistance break were bullish in late July 2009.
this daily divergence. The index continued higher since the Vitali Apirine is a programmer engineer with an interest
uptrend was strong. in technical analysis, especially the application of relative
strength index to trading. He may be reached at vitapirine@
Putting it all mediacombb.net.
together
W&D MACD combines weekly and The code given in this article is available in the Article Code section
daily MACD signals. The standard of our website, www.Traders.com.
settings for W&D MACD are the
differences between the 60- and See our Traders’ Tips section beginning on page 50 for commentary
130-day EMAs and between the and implementation of Apirine’s technique in various technical
12- and 26-day EMAs. The daily analysis programs. Accompanying program code can be found in
MACD oscillates above/below the Traders’ Tips area at Traders.com.
the weekly W&D MACD. The
weekly W&D MACD fluctuates Further reading
above/below the zero line. Weekly Apirine, Vitali [2017]. “Moving Average Stochastic,” Technical
centerline crossovers are less frequent than relative daily Analysis of Stocks & Commodities, Volume 35: May.
MACD crossovers and daily MACD centerline crossovers. [2016]. “Higher Highs & Lower Lows,” Technical Analy-
Weekly W&D MACD centerline crossovers on daily charts sis of Stocks & Commodities, Volume 35: February.
are close to MACD centerline crossovers on weekly charts. Murphy, John J. [1999]. Technical Analysis Of The Financial
In John J. Murphy’s book Technical Analysis Of The Financial Markets, Prentice Hall Press.
Markets he points out that signals on weekly charts are more ‡MetaStock
important than those on daily charts. ‡See Editorial Resource Index
Weekly MACD centerline crossovers and weekly diver-
gences are more important than relative daily MACD centerline
and more!
StockCharts.com
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