MACD Technical Analysis Buy and Sell Trading Signals
Since the MACD uses 26 and 12 EMA to plot, we shall compare these 2 EMAs with MACD to figure out how these buy & sell signals are generated.
MACD Gold Indicator - Explanation of MACD Technical Indicator
The MACD is a leading indicator meaning it generates signals that are leading compared to price action as opposed to lagging indicators which lag behind the price.
Buy Trade
A buy trade is generated/derived when there's a MACD fast line crosses above the signal line. However, as with any leading indicator these signals are prone to whipsaws/fake-outs.
To eliminate the fake outs it is good to wait for confirmation of the buy/sell trade signals. The confirmation trading signal is when the 2 lines cross above the zero mark, when this happens the buy generated is a reliable signal.
In the example shown below, the MAs indicator derived & generated a buy signal, before price started to move upwards. But it wasn't until the MACD moved above the zero mark that the buy signal was confirmed, & the MAs also gave a cross over signal. From experience it's always good to buy after both MACD lines move above zero center-line mark.
Where to Buy using MACD Gold Indicator - Buy Trading Signal
Sell Trade
A sell signal is generated/derived when there's a MACD fast line crosses below signal line. However, just like the buy signal, these also are prone to whip-saws/ fakeouts signals.
To eliminate the fake outs it's good to wait for confirmation of the sell trade signal. The confirmation is when the 2 lines cross below zero line, when this happens the sell trade signal generated is a reliable signal.
In the examples shown below, the MAs generated a sell signal confirmed after MACD moved below zero mark at the same time that the MAs gave a cross over signal.
Where to Sell using MACD Gold Indicator - Sell Signal
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