Ask Colin

To buy troughs in a trend, is MACD a useful indicator for an investor?

Yes. You would be looking to buy when the MACD line crosses from below to above the Signal line. An investor should use weekly closing prices when calculating the MACD. Daily closing prices are more suitable for a trader.

You could also use MACD Histogram - the difference between the two MACD lines - which is available in some charting software packages. You would use this like RSI as explained in my article in Shares magazine July 2003. When the MACD Histogram falls below zero and then ticks up can hit troughs in the trend quite nicely. Use weekly closing prices if you are an investor and daily if you are a trader.

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