MACD Analysis Buy & Sell Trading Signals
Since the MACD indicator uses 26 and 12 Exponential Moving Average to plot, we shall compare these two EMAs with the MACD indicator to determine how these buy & sell signals are generated.
MACD - Example of MACD Indicator
The MACD technical indicator is a leading indicator meaning it generates gold signals that are leading compared to price action as opposed to lagging indicators that lag behind the price.
Buy XAUUSD Trade
A buy trade gets generated when there is a MACD fast line crosses above signal line. However, as with any leading technical indicator these gold signals are prone to whipsaws/fake outs.
To eliminate the fake-outs it's good to wait for confirmation of the buy/sell trading signals. The confirmation trading signal is when the two lines cross above the zero mark, when this happens the buy derived & generated is a reliable signal.
In the illustration shown & described below, the MAs gold indicator generated/derived a buy signal, before price started going upward. But it wasn't until the MACD moved above the zero line that the buy signal was completed, and the Moving Averages also gave a crossover gold signal. From experience it is always good to buy after both MACD lines move above zero center line mark.
Where to Buy using MACD - Buy Trading Signal
Sell Trade
A sell signal gets generated when there is a MACD fastline crosses below signalline. However, just like the buy signal, these also are prone to whipsaws/ fakeouts.
To eliminate the whipsaw fakeouts it's good to wait for confirmation of the sell trading signal. Confirmation is when 2 lines cross below the zero mark, when this happens the sell generated is a reliable signal.
In the illustrations illustrated and shown & described below, the MAs generated a sell signal confirmed after MACD moved below the zero line the same time that the Moving Averages gave a cross-over signal.
Where to Sell using MACD - Sell Signal
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- How Do You Trade MetaTrader 5 XAUUSD Trend lines Trading Indicator & MT5 Gold Channels Indicator on MetaTrader 5 Platform Software?
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