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