Trade Stock Indices

MACD Indicator Cross-over Signals

MACD signals for trades happen when lines cross in the middle, using the mark at the center. You can use MACD middle line crosses to be more sure about the market feeling.

When the MACD Index goes above the middle line, it shows positive market feelings, while going below the middle line shows negative market feelings.

  • When Fast-line crosses below the MACD Line (not center mark) it shows Index market momentum is slowing - this is not a reversal signal or a sell signal, wait for center line mark cross over.
  • When Fast line crosses above MACD Line (not center mark) it shows the market momentum is slowing - this is not a reversal trading signal or a buy signal, wait for center line mark crossover.
  • The Center-Line crossover signals will be the best trading signals for confirming buy & sell signals.


Using the trade chart presented in the illustration below, when the MACD fast line drops below the zero center line, a sell signal is confirmed, signifying a shift to bearish sentiment and a downward market trend.

Additionally, in the example below, when the MACD fast line crosses above the zero center line, a buy signal is generated, indicating a shift in market sentiment to bullish - an upward trend.

How Do You Trade with MACD Crossover Signal Strategies?

MACD Zero-Line Mark Crossover - Precisely When a Sell Signal & Buy Signal are Generated

Oscillation of the MACD

The MACD oscillator swings above and below a zero line. That line marks neutrality. Readings over zero signal bull trends: under zero points to bears.

The MACD is also employed to signal conditions of being overbought or oversold. When the MACD reaches extremely extended values, it suggests an index is either overbought or oversold. However, in a market experiencing a strong sustained upward trend, prices may remain in an overbought state, making buying the index the preferable action in this scenario.

Also in a strong downward trending market its better to sell the index, because prices will stay in the over-sold region for a long time.

Indications of overbought market states or boundaries manifest well above the zero line, whereas oversold indications or boundaries appear significantly beneath the zero mark.

How to Trade with MACD Crossover Signal Strategy

MACD Overbought Region - Stock Index Trend Continuation Signal

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