The MACD (Moving Average Convergence Divergence) calculates the difference between the 12 and the 26 day moving averages. Buy and sell signals are triggered by movements in the MACD signal line, which is based on a 9 day moving average.

If the MACD and 9 day moving average lines cross below the zero level it indicates a buy. If they cross above the zero level beware of a decline. In order to reduce the amount of buy-sell signals, we synchronize our MACD with a RSI (Relative Strength Index). If the RSI is above 0.6, no buy signal is given, and if the RSI is below 0.6, no sell signal is given.

This indicator is quite effective in stochastic or oscillating markets.