MACD Technical Analysis Buy & Sell Stock Indices Signals

Since the MACD indicator uses 26 and 12 EMA to plot, we shall compare these two EMAs with the MACD indicator to determine how these buy and sell signals are generated.

MACD Stock Index Indicator - Example of MACD Technical Indicator

The MACD indicator is a leading indicator meaning it generates stock indices signals that are leading compared to stock index price action as opposed to lagging indicators that lag behind the stock index price.

Buy Stock Indices Trade

A buy stock indices trade is generated when there's a MACD fast line crosses above signal line. However, as with any leading indicator these stock indices trading signals are prone to whipsaws/fake-outs.

To eliminate the whipsaws it's good to wait for confirmation of the buy or sell signals. The confirmation stock indices signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable stock index trading signal.

In the stock indices example illustrated below, the Moving average stock indices indicator generated a buy signal, before stock index price started to move up. But it wasn't until the MACD moved above the zero line that the buy signal was confirmed, and the Moving Averages also gave a crossover stock indices signal. From experience it's always good to buy after both the MACD lines move above zero center line mark.

Where to Buy using MACD Stock Index Indicator - Buy Stock Indices Signal

Sell Indices Trade

A sell trading signal is generated when there's a MACD fast line crosses below signal line. However, just like the buy signal, these are also prone to whipsaws/ fake outs.

To eliminate the whipsaws it is good to wait for confirmation of the sell signal. The confirmation is when the two lines cross below the zero mark, when this happens the sell generated is a reliable stock index trading signal.

In the stock indices example illustrated below, the Moving average generated a sell confirmed after MACD moved below the zero line at the same time that the Moving Averages gave a crossover stock index trading signal.

Where to Sell using MACD Stock Index Indicator - Sell Stock Indices Signal