MACD Analysis Buy and Sell Signals

Since the MACD uses 26 and 12 EMA to plot, we shall compare these two EMAs with the MACD to figure out how these buy & sell signals are generated.

MACD Technical Analysis Buy & Sell Signal - MACD Index Strategies

MACD Indicator - Example of MACD Indicator

The MACD is a leading indicator meaning it generates Indices signals that are leading compared to price action as opposed to lagging indicators that lag behind the Index price.

Buy Indices Trade

A buy Indices trade is derived & generated when there is a MACD fast line crosses above the signal line. However, as with any leading indicator these Indices signals are prone to whipsaws/ fake outs.

To eliminate the whipsaws it's good to wait out for confirmation of the buy or sell signals. The confirmation Index signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable Index signal.

In the Indices example below, the MAs Stock Indices indicator derived & generated a buy trading signal, before price started to move up. But it was not until the MACD moved above the zero line that the buy Indices signal was completed, and the MAs also gave a crossover signal. From experience its always good to buy after both MACD lines move above zero center-line mark.

Where to Buy using MACD Indicator - Buy Trading Signal

Sell Trade

A sell signal is derived & generated when there is a MACD fast line crosses below the signal line. However, just like the buy Indices signal, these are also prone to whipsaws/ fake-outs.

To eliminate the whipsaws its good to wait for confirmation of the sell signal. The confirmation is when the two lines cross below zero mark, when this happens sell signal generated is a reliable Index signal.

In the Index example illustration set-out below, the MAs generated a sell signal confirmed after MACD moved below zero line at the same time that the MAs gave a crossover signal.

Where to Sell using MACD Indicator - Sell Signal

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Trade Forex Trading

MACD Analysis Buy and Sell Signals

Buy Indices Trade

Sell Trade