Ask Colin

What does it mean if several stocks in strong downtrends are showing three or more divergences on MACD?

The problem with divergences is that there is usually a divergence before a trend change, but there is not always a trend change after every divergence. This makes them very difficult to work with.

Triple divergences are supposed in the textbooks to be more powerful signals than single divergences. However, I don't understand why three is such an important number.

Divergences are interesting for MACD, but the more important signal is the crossover of the MACD and the Signal line.

If you want a signal of the general end of a major bear market, a weekly, or better, a monthly MACD will tend to give a better signal than divergences on a daily MACD.