MACD Indicator Cross Over Signals

MACD Center line crossovers generate signals using the center line mark. The sentiment of the trading market can be confirmed using the MACD center line crossovers. MACD crossover above the center line mark generates bullish stock market sentiment while cross-over below the center-line generates bearish market sentiment.

• When the Fast-line crosses below MACD Line (not center-mark) it shows market momentum is slowing - this isn't a reversal signal or a sell signal, wait for center mark crossover.
• When the Fast line crosses above the MACD Line (not center mark) it shows the market momentum is slowing - this isn't a reversal signal or a buy signal, wait for center mark crossover.
• The Center-Line crossover signals will be the best signals for validating buy & sell signals.

Using the chart in the example illustrated and explained below, when MACD fast line crossed below the zero center mark, the sell signal was confirmed and the market sentiment changed to bearish - downwards trend.

Also in the example illustrated and explained below when MACD fast line later crosses above zero center mark, a buy signal was generated and the market sentiment changed to bullish - upwards trend.

MACD Zero-Line Mark Crossover - Precisely When a Sell Signal and Buy Signal are Generated

Oscillation of the MACD Indicator

The MACD indicator is an oscillator that moves up and down around a zero center line mark. The center-line is the neutral measurement, values above zero will indicate bullish stock market trend while values below indicate bearish stock trend.

The MACD indicator is also used to indicate overbought and oversold levels. When the MACD reaches overextended levels, then a instrument is overbought or oversold. However, in a strong upward trending market prices will stay overbought in this case it's better to buy.

Also in a strong down trending trading market its better to sell, because prices will stay in the oversold region for a long time.

Overbought conditions occur above the zero line while oversold conditions occur way below the zero mark.

MACD Overbought Region - Trend Continuation Signal