MACD Technical Analysis Buy & Sell Trading Signals
Since the MACD indicator uses 26 and 12 Exponential Moving Average to plot, we shall compare these two EMAs with the MACD indicator to determine how these buy & sell signals are generated.
MACD Commodities Trading Indicator - Example of MACD Technical Indicator
The MACD indicator is a leading indicator meaning it generates commodity trading signals that are leading compared to commodity price action as opposed to lagging indicators that lag behind the commodity price.
Buy Commodity Trade
A buy commodity trade is generated when there is a MACD fast line crosses above signal line. However, as with any leading indicator these commodity signals are prone to whipsaws/fake outs.
To eliminate the whipsaws it's good to wait for confirmation of the buy or sell signals. The confirmation commodity signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable commodity signal.
In the commodities trading example shown below, the Moving average commodity indicator generated a buy signal, before commodity price started to move up. But it wasn't until the MACD moved above the zero line that the buy signal was confirmed, and the Moving Averages also gave a crossover commodity signal. From experience it's always good to buy after both the MACD lines move above zero center line mark.
Where to Buy using MACD Commodities Trading Indicator - Buy Trading Signal
Sell Commodities Trade
A sell signal is generated when there's a MACD fast line crosses below signal line. However, just like the buy signal, these are also prone to whipsaws/ fake outs.
To eliminate the whipsaws it is good to wait for confirmation of the sell signal. The confirmation is when the two lines cross below zero mark, when this happens the sell generated is a reliable commodity signal.
In the commodities trading example illustrated and shown below, Moving average generated a sell confirmed after MACD moved below zero line at same time that the Moving Averages gave a crossover commodity signal.
Where to Sell using MACD Commodities Trading Indicator - Sell Trading Signal
