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Negative MACD divergences

I noticed on a number of stocks that I follow that many have a developed a negative MACD divergence on the daily charts, but no MACD divergence on the weekly charts. What do you think that means for the price going forward?



  • Options
    If the divergence is on the daily chart, but not the weekly chart, then it would be less serious. If you see it on the weekly chart, then it would be more serious.

    Divergences themselves are not signals. They are indications of upcoming potential shifts, but not always. I do not believe, but not sure, if there is a boundary to how short or long these can last.
  • Options
    edited August 2014
    Assuming the markets are going to correct and go down, then the daily negative divergence provides supporting supporting evidence that in the near term the stock will retreat. So the next step is predicting. How far down will your stock go? The nearest support zone? A still lower price but with stronger support (that is a zone where there a more touches and the stock consolidated.) After you make these predictions, determine how big a percentage drop it is and/or draw Fibbonaci lines. You are trying to determine if the stock is reversing going from bullish to bearish, or if the stock is correcting -- a smaller retreat, before a new move up.

    If the stock is reversing then the daily divergence is the canary in the mine, your weekly MACD will also roll over and turn negative. If the stock is correcting then your weekly MACD may stay healthy until the market resumes its upward momentum in September/October.
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