MACD — Crossovers & Clear Buy / Sell Signals (Single Example)
A straightforward MACD chart: see where MACD crosses the Signal line. A red ↓ indicates a SELL (MACD crossing **below** Signal). A green ↑ indicates a BUY (MACD crossing **above** Signal).
Interpretation: the red arrow marks the point where the MACD line crossed **below** the Signal line → SELL. Later the green arrow shows MACD crossing **above** the Signal line → BUY.
MACD (Moving Average Convergence Divergence) is a momentum & trend-following indicator. It is built from the difference between a fast EMA (e.g., 12-period) and a slow EMA (e.g., 26-period). The Signal line is typically an EMA (e.g., 9-period) of the MACD itself. Crossovers of MACD and Signal indicate changes in momentum.
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Easy to read crossovers — good for identifying momentum shifts.
Works across timeframes, commonly-used and widely supported.
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Lagging indicator — uses moving averages, so signals come after price moves.
Can give false signals in choppy, sideways markets.
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Shows divergence vs price which can warn of reversals.
Combines momentum and trend information in one view.
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Parameter sensitivity — results depend on EMA periods used.
Interpretation of divergence requires experience.
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- Buy when MACD crosses above Signal (confirmed momentum).
- Sell when MACD crosses below Signal (momentum fading).
- Use stop-loss, and combine with trend or support/resistance to reduce false signals.
