Trade Stock Indices

MACD Indicator Crossover Signals

MACD centerline crossover signals are generated at the centerline mark. The market sentiment can be gauged by these crossovers: a crossover above the centerline suggests a bullish sentiment, while a crossover below indicates bearish sentiment.

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

Look at the chart example below. The MACD fast line crossed under zero. This confirmed a sell signal. Market mood turned bearish, starting a down trend.

In the trading example depicted below, when the MACD fast line crosses above the zero center line, a buying indication emerges, reflecting a shift in the market's sentiment towards a bullish, upward direction.

MACD Zero Line Crossovers - Best MACD Crossover Strategies for Stocks

MACD Zero-Line Cross over - Precisely When a Sell Signal & Buy Signal are Generated

Oscillation of the MACD

The MACD technical indicator is an oscillator that moves up and down around a zero line. The zero line is neutral: values above zero show the price is trending up, while values below zero show the market is trending down.

The MACD indicator helps spot when a market is overbought or oversold. If MACD hits an extreme, the index is probably stretched too far. But in a strong uptrend, prices can stay overbought for a while - in that case, buying works out better.

Also, when the market is clearly going down, it's better to sell because trading prices will stay low for an extended duration.

Overbought levels are found significantly above the zero mark, while oversold conditions lie well below the zero line.

MACD Overbought Region - MACD Crossover Signals

MACD Over-bought Region - Trend Continuation Signal

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