Moving Average Difference
Moving Average Difference (MAD) calculates the difference between the fast and the slow moving averages and returns the value as a histogram. The larger the separation of the moving averages, the more likely a trend reversal will occur.
The proper way to trade using the MAD indicator is to trade when MAD has peaked and going the other direction. This is a sign of a trend reversal.
The Signal line represents the difference between the signal moving average and the fast moving average. This gives you a good idea of when a trend has peaked. The reason this shows a peak is because the market price ALWAYS moves back to the moving average. Once price crosses the moving average it will always, always, always cross back over the moving average. This is why the signal line is a good indicator of market reversals and a good support indicator to the MAD.
I hope everyone will enjoy this indicator and leave some feedback on how I can improve it. Good luck and happy trading.
DISCLAIMER: The Forex is unstable market and can change direction at any time and for any reason. I, Patrick Cofflin, do not take responsibility for any loses you may incur while trading real money on the Forex using the MAD indicator. Trade using the MAD indicator at your own risk.