Bullish and Bearish Index Signals
The MACD is one of the most widely and commonly used indicators available. MACD is a momentum oscillator with some trend following characteristic tendencies.
MACD is one of the most popular/liked indicators used in technical analysis. MACD is used to generate signals using crossovers.
MACD plots the divergence & convergence of moving averages. MACD is constructed using moving average analysis. Moving Average Convergence/Divergence is a trend following technical indicator. MACD shows the correlation between 2 moving averages.
One moving average is of a shorter period & the other for a longer period of the price bars.
MACD Indicator - MACD Indicator Analysis
MACD has got a zero center-line: values/readings above the zero line are bullish while those below the zero are bearish.
In an upwards market trend the shorter MACD line rises faster than the longer MACD line this creates a gap. In addition as long as the MACD technical indicator is above the center line the trend is still bullish as is illustrated below.
Do not sell as long as the MACD Indicator is above the Center Line Mark - this is bullish territory and it does not matter how it is moving as long as it's above the zero center line mark, such as shown in the example illustration below.
MACD Indicator Above Zero Mark - Bullish Index Signal
In a downwards trend the shorter MACD line falls faster than the longer MACD line this creates a gap. In addition as long as the technical indicator is below the center line the trend is still bearish as is illustrated below.
Do not buy as long as the MACD Indicator is below the Center Line Mark - this is bearish territory & it doesn't matter how it's moving as long as it is below zero center line mark, as revealed in the example illustration laid-out below.
MACD Indicator Below Zero Center Line Mark - Bearish Index Signal
When the trend is about to turn and reverse the MACD lines begin to move closer to each other, thus closing the gap.
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