MACD Center Line Crossover - Bullish & Bearish Trade Signals
The MACD is one of the most widely & often used indicators available. MACD is a momentum oscillator with some trend following characteristics.
MACD is one of most popular indicators used in technical analysis. MACD is used to generate signals using crossovers.
MACD plots the divergence and convergence of moving averages. MACD is constructed using moving average analysis. Moving Average Convergence/Divergence is a trend following indicator. MACD shows the correlation between two moving averages.
One moving average is of a shorter period & the other for a longer period of the price bars.
MACD - MACD Analysis
MACD has got a zero center-line: readings above zero line are bullish while those below zero are bearish.
In an upward market trend the shorter MACD line rises faster than the longer MACD line this forms a gap. Additionally as long as the MACD technical indicator is above the center mark the market trend is still bullish as is illustrated and shown below.
Do not sell as long as the MACD is above the Center Line - this is bullish territory & it does not matter how it's moving as long as it is above the zero center line mark, like is shown in the illustration presented below.
MACD Above Zero Mark - Bullish Trade Signal
In a downward trend the shorter MACD line falls faster than the longer MACD line this forms a gap. Additionally as long as the indicator is below the center mark the market trend is still bearish as is illustrated and shown below.
Do not buy as long as the MACD is below the Center Line - this is bearish territory and it does not matter how it's moving as long as it is below zero center line mark, like shown in the illustration presented below.
MACD Below Zero Center-line Mark - Bearish Trade Signal
When the market trend is about to turn and reverse the MACD lines start to move closer to each other, thus closing the gap.
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