MACD Technical Analysis Buy & Sell Trading 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 oil signals are generated.

MACD Crude Oil Indicator - Example of MACD Technical Indicator

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

Buy Crude Oil Trade

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

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

In the crude oil trading example explained below, the Moving average oil indicator generated a buy oil trading signal, before crude oil price started to move up. But it wasn't until the MACD moved above the zero line that the buy oil signal was confirmed, and the Moving Averages also gave a crossover oil 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 Crude Oil Trading Indicator - Buy Trading Signal

Sell Oil Trade

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

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

In the crude oil trading example explained 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 oil signal.

Where to Sell using MACD Crude Oil Indicator - Sell Trading Signal