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Using the MACD to confirm momentum

The MACD indicator is used to filter out poor setups by confirming momentum.

For the purposes of the Zone Trade, momentum is considered good when the histogram makes higher lows or higher highs in an uptrend, and lower highs or lower lows in a downtrend.

When in an uptrend the histogram stops making higher lows or higher highs, or conversely, in a downtrend it stops making lower highs or lower lows, it is an indication that momentum is fading and our instrument is no longer ideal for the Zone Trade.