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 signals are generated.

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 or sell 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 signal, before price started heading 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 center line mark.

Where to Buy using MACD Indicator - Buy Signal

Sell Trade

A sell signal gets generated when there's a MACD fast line crosses below signal line. 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 signal. The confirmation is when two lines cross below 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