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MACD Trading Strategies

MACD Center Line Crossover - Bullish and Bearish Signals

One of the most popular and frequently used technical indicators is the MACD, which is identified as a momentum indicator. The MACD is a momentum oscillator that trades with a few trend-following tendencies.

Lots of people like using MACD in technical analysis. MACD helps create forex signals by using points where lines cross.

MACD spots where moving averages diverge or converge. It builds on moving average methods. As a trend-following tool, MACD links two moving averages.

One MA Covers Short-Term Bars: the Other Handles Longer Periods.

MACD Technical Analysis

MACD - MACD Analysis

MACD contains a zero center line: readings above the line denote bullishness, while those below indicate bearishness.

In an uptrend, the short MACD line climbs quicker than the long one. This forms a space between them. As long as MACD stays above the zero line, the trend stays up. See the chart below.

Avoid selling while MACD remains above the center line, as this indicates a bullish zone, regardless of its movement, provided it stays above the zero center mark as illustrated below.

MACD Above Zero Mark - Bullish Signal

MACD Above Zero Mark - Bullish Signal

In a down forex trend, the short MACD drops quicker than the long one. This opens a gap between them. The trend stays bearish while it's under the zero line, as the chart shows.

Do not buy as long as the MACD is below the Center Line - this is bearish region and it doesn't matter how it is moving as long as it's below the zero center line mark, as revealed on the illustration below.

MACD Below Zero Center Line Mark - Bearish Signal

MACD Below Zero Center Line Mark - Bearish Signal

When a forex trend is on the verge of shifting or reversing its direction, the lines displayed by the MACD indicator begin to converge, thereby closing the space between them.

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