MACD Analysis Buy and 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 and sell trading signals are generated.

Example of MACD Indicator - XAUUSD MACD Indicator Explained

MACD Indicator - Example of MACD Technical Indicator

The MACD 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 is generated when there is a MACD fast line crosses above signal line. However, as with any leading 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 signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable signal.

In the example shown and described below, the MAs gold indicator generated a buy trade signal, before price started moving upwards. But it wasn't until the MACD moved above the zero line that the buy signal was confirmed, and the Moving Averages also gave a crossover gold signal. From experience it's always good to buy after both MACD lines move above zero centerline mark.

Where to Buy using MACD Indicator - Buy Trading Signal

Sell Trade

A sell trading 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. The confirmation is when two lines cross below the zero mark, when this happens the sell generated is a reliable signal.

In the examples illustrated and described below, the MAs generated a sell confirmed after MACD moved below the zero line at the same time that the Moving Averages gave a cross-over signal.

Where to Sell using MACD Indicator - Sell Trading Signal

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MACD Analysis Buy and Sell Trading Signals

Buy XAUUSD Trade

Sell Trade