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MACD Indicator Crossover Trading Signals

MACD Center line crossovers generate Forex trading signals using the center mark. The sentiment of the Forex market can be confirmed using the center line crossovers. Crossover above the center mark generates bullish Forex market sentiment while crossover below the center line generates bearish market sentiment.

 

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

 

Using the EURUSD Forex chart in the example below, when MACD fast line crossed below the zero center mark, the sell signal was confirmed and the market sentiment changed to bearish.

 

Also in the example below when MACD fast line later crosses above zero center mark, a buy signal was generated and the market sentiment changed to bullish.

Centerline crossover of the MACD indicator

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

 

Oscillation of the MACD indicator

The MACD Forex indicator is an oscillation indicator that moves up and down around a zero mark. The center-line is the neutral measurement, values above zero will indicate bullish Forex market conditions while values below indicate bearish forex market region.

 

The MACD is also used to indicate overbought and oversold levels. When the MACD reaches overextended levels, then a currency is overbought or oversold. However, in a strong upward trending market prices will stay overbought in this case its better to buy.

 

Also in a strong down trending Forex market its better to sell, because prices will stay in the oversold region for a long time.

 

Overbought conditions occur above the zero line while oversold conditions occur way below the zero mark.

MACD Overbought Conditions

MACD Overbought Region - Trend Continuation Signal

Market Sentiment: Risk Appetite Risk Averse Market Sentiment in FX Markets

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