Discussion in 'Technical Analysis' started by Peachcake, Jul 10, 2015.

  1. Peachcake


    Hi everyone,

    I'm a newbie. I'm trying to get a better understanding of RSI and MACD. Per Investopedia, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset and MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices. Do people normally use these two together since they are both momentum indicator?

  2. Not 100% of this description... (1) RSI is a first derivative of price, but (2) MACD is(?) a second derivative of price as it's based upon moving averages. By the time you get some indication from MACD, something else should have clued you in sooner.

    I've never found MACD to be especially useful or valuable. IOW.. I don't use MACD at all... lags too much. By the time MACD gives you something, something else should have clued you in sooner. RSI is actually a useful tool. Doesn't give signals all that often, but usually good when it indicates "counter extremes".

    Others will extol the merits of MACD, but I don't see it.
    Last edited: Jul 10, 2015
    Chris Mac likes this.
  3. Chris Mac

    Chris Mac

    I agree Scataphagos, even if I use MACD too.
    RSI already gives you good signals.
    IMO, main difference between RSI and MACD is that you get no upper and lower boundaries with MACD. RSI will always be between 0 and 100.
    So RSI is easier to follow and understand. But MACD is powerful if you use it with a longer timeframe to compare historical highs and lows.
    You better master RSI first, then MACD.

  4. I prefer TSI (True Strength). It is a nice combination of leading and lagging functions.
  5. Trader13


    One strategy that combines both indicators is to use a longer-term MACD to define the trend and a short-term RSI to time pullbacks for trade entry. I would backtest this thoroughly before committing any money.
  6. Turveyd


    More technically....

    Rsi look at the prev high and prev low then, work out where you are in that range as a percentage, imho ignore no future predictive abilility.

    Macd 1 ema 1 sma show the difference between the 2, so might aswell just plot 1 ema and 1sma on you chart, way more useful.
  7. romik


    Use in conjunction, this is what you need to look for, always in conjunction with price action.