MACD Technical Analysis Buy and Sell Stocks Signals
Since the MACD stocks 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 Indicator - Example of MACD Stocks Indicator
The MACD stocks indicator is a leading indicator meaning it generates stocks signals that are leading compared to stocks price action as opposed to lagging indicators that lag behind the stocks price.
Buy Stocks Trade
A buy stocks trade is generated when there is a MACD fast line crosses above the signal line. However, as with any leading indicator these stocks 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 stocks signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable stocks signal.
In the stocks example illustrated and explained below, the Moving average stocks indicator generated a buy signal, before stocks 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 stocks 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 Indicator - Buy Stocks Signal
Sell Stock Trade
A sell signal is generated when there is a MACD fast line crosses below the signal line. However, just like the buy signal, these are also prone to whipsaws/ fake outs.
To eliminate the whipsaws it's 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 stocks signal.
In the stocks example illustrated and 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 stocks signal.
Where to Sell using MACD Stock Indicator - Sell Stocks Signal
