MACD Center Line Crossover - Bullish & Bearish Trading Signals

The MACD indicator is one of the most widely & commonly used indicators available. MACD indicator is a momentum oscillator with some trend following characteristics.

MACD is one of most popular indicators used in technical analysis. MACD indicator is used to generate signals using crossovers.

MACD plots the divergence and convergence of moving averages. MACD indicator is constructed using moving average analysis. MA Moving Average Convergence/Divergence is a trend-following technical indicator. MACD indicator shows the correlation between two moving averages.

One moving average is of a shorter period and the other for a longer period of price bars.

MACD Indicator - MACD Indicator Analysis

MACD indicator has a zero center line: values above zero line are bullish while those below zero are bearish.

In an upward trend the shorter MACD line rises faster that the longer MACD line this creates a gap. In addition as long as the MACD indicator is above the center mark the market trend is still bullish as is illustrated below.

Do not sell as long as the MACD Indicator is above the Center Mark - this is bullish territory & it does not matter how it is moving as long as it's above the zero center mark, as shown on the example below.

MACD Indicator Above Zero Mark - Bullish Trading Signal

In a downward trend the shorter MACD line falls faster than the longer MACD line this creates a gap. In addition as long as the indicator is below the center mark the market trend is still bearish as is illustrated below.

Do not buy as long as the MACD Indicator is below the Center Mark - this is bearish territory & it does not matter how it is moving as long as it's below the zero center mark, as shown on the example below.

MACD Indicator Below Zero Center Line Mark - Bearish Trading Signal

When the trend is about to reverse the MACD lines start to move closer to each other, thus closing the gap.