Advanced Courses - Course 4
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Crypto Trading Made Simple.
Risk Disclaimer
*Trading cryptocurrency is very risky and is not suitable for all investors. It’s extremely likely you will sustain a loss of some, or all of your initial
investment and therefore you should only invest what you’re willing to lose. Everything taught in Crypto Crew University Courses is for educational
purposes only and should not be used as financial advice. Always speak with a professional financial planner before making any financial decisions.
Steve and Crypto Crew University are not held responsible for any financial losses that occur in your account.*
Overview of CCU Advanced Courses:
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We’re going to cover the Fib, Bollinger Bands, Elliott Wave
Theory, Key Chart patterns, MACD, Stochastic RSI, Trends
and overall which ones are the most accurate as well as
Steve’s Daily Chart Routine
We’re going to discuss strategies for Day Traders, Swing
Traders, Long-Term Investors and the Hybrid Strategy –
all using each of the above
Finally, we’ll add one distinct and highly important
piece to our strategy that we’ve been building since the
Beginner Course
Overall Course Goals:
1.
Get comfortable then confident with the
most important Indicators on Earth
2.
Understand how to use each indicator as
well as a strategy for each specific indicator
3.
Understand Day Trading, Swing Trading,
Long Term Investing and the Hybrid
Strategy – all using these popular indicators
4.
Further development of the Hybrid Strategy
– adding a key missing piece
Course 4 – Overview
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What is MACD
How to use MACD
When to use MACD
What other indicators to pair with MACD
How accurate is MACD
Quiz
Homework
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ADVANCED
COURSES
Course 4
1. What is MACD
The MACD indicator is a trend momentum indicator. MACD is an acronym for Moving Average Convergence
Divergence.
The indicator was developed by Gerald Appel and is discussed in his book, The Moving Average Convergence
Divergence Trading Method. Needless to say over 30 years later, the MACD remains one of the most popular
indicators in technical analysis.
Settings:
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1 a. Three Parts to MACD:
1. MACD Line – Blue Fast line(top uptrend, bottom downtrend)
2. Signal Line (trigger line) – Green gives us signals to buy and sell (Slow Line) Moving average of MACD so
it’s smoother
3. Histogram – Red + green – as approaches 0 signals potential crossover. When positive it’s an uptrend.
When negative it’s a downtrend. Tells us how big or how small the move is. The bars are red when it’s
below 0 (downtrend) and green when above 0 (uptrend).
1 b. Key Points:
1. Bearish below 0 RED
2. Bullish above 0 GREEN
1 c. Common confusions with MACD:
1. The two lines that are drawn are NOT moving averages of the price. Instead, they are the moving averages
of the DIFFERENCE between two moving averages
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2. How to use MACD
2 Main Ways to Use MACD
1. Crossovers - The most important signal of the MACD is when the signal line crosses the MACD up or
down. When the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time
to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which
suggests that the price of the crypto is likely to experience upward momentum. Many traders wait for a
confirmed cross above the signal line before entering into a position to avoid getting “faked out” or entering
into a position too early. DEMO.
While the MACD may provide many cross signals, you do not want to act on every signal.
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2. Divergence - Moving Average Convergence Divergence - indicator is popular among traders
and analysts, yet few really understand it. Divergence on the MACD is one of the ways the
indicator is used and takes two forms. When the price of a crypto is moving one direction and
the MACD in the other, that’s divergence. This type of signal is supposed to warn of a reversal.
Another type of divergence is when the price makes a new high (or a new low), but the MACD
doesn’t. Traditionally this indicates the price is losing momentum and prime pickings for a
reversal.
When the price diverges from the MACD, it signals the end of the current trend. For example,
a price that is rising and a MACD indicator that is falling could mean that the rally is about
to end. Conversely, if a crypto is falling and the MACD is rising, it could mean that a bullish
reversal could occur in the near-term. Traders often use divergence in conjunction with other
technical indicators to find opportunities.
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3. When to use MACD
Day traders and long term investors typically will not use the MACD. It’s generally used more for swing
traders, and used as a tool for Hybrid traders.
It gives buy and sell signals each time the lines cross. The histogram tells us when the cross will happen
(whether it’s close or not). The histogram measures how close the lines are to moving together. The
histogram at 0 means the lines have crossed which gives us our signal. It’s also significant to use the MACD
for a cross above 0 (bullish) or below 0 (bearish).
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Day Traders – See below for the 5 minute chart Please note on the below chart that the MACD crossed
typically 2 bars after the Stoch RSI and typically took the MACD several extra bars to trigger the trade at 0.
To Buy:
1. Have Stochastic oversold with a cross (previous
courses rules)
2. MACD cross at or below 0
To Sell:
1. Have Stochastic RSI Overbought with a cross
(previous courses rules)
2. MACD cross at or above 0
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Swing Traders – Below is the 4 hr chart for swing traders.
To Buy:
3. Have Stochastic oversold with a cross
(previous courses rules)
4. MACD cross at or below 0
To Sell:
3. Have Stochastic RSI Overbought with a
cross (previous courses rules)
4. MACD cross at or above 0
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Investors – Investors typically focus on the weekly or monthly charts. However, as you can see
in the picture below, the MACD is useless. As the time frames go up, the MACD issues are more
apparent. Again, I personally just use as a tool but it would take a high level of customization to
get the speed relative to crypto. DEMO
The Hybrid Trader: I typically use the MACD as a tool and specifically for divergence spotting’s. It’s
highly important to understand the MACD, how it functions and how it’s different than the other
indicators. For me personally, it’s speed does not match well with the natural cycles of crypto,
therefore I do not trade with it but instead use it as a tool in my toolkit.
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Quiz
1. What is the MACD used for?
2. What types of traders use the MACD and which don’t and why?
3. What is divergence?
4. What time frames can you see divergence on?
5. What can you use to spot divergence?
6. What is the histogram used for in the MACD?
7. What is hidden divergence and how is it different than regular divergence?
8. How do you know if divergence will make the price go up or down?
9. Do long term investors use MACD? Why or why not?
10. What does Steve use the MACD for?
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HOMEWORK
1. Practice MACD on 3-5 different coins – first understand the 3 components – fast line, slow line and
histogram
2. Next look for crosses on the 3-5 coins and identify which ones fit buy and sell signals – pair with
Stochastic RSI to confirm – did you find false signals?
3. Make master list of vocab with this course and all previous courses
4. Understand the false signals with MACD, compare these false signals to other indicators in this course,
what do you notice?
5. Practice finding divergence on at least 3 charts – what do you notice?
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