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MACD Stock Trading Strategies




Bullish and Bearish Stock Trading Signals

The MACD stock indicator is one of the most widely and commonly used stock indicators available. MACD indicator is a momentum oscillator with some stock trend following characteristics.


MACD is one of the most popular indicators used in stocks trading analysis. MACD indicator is used to generate stocks signals using crossovers.


MACD plots the divergence and convergence of moving averages. MACD indicator is constructed using moving average analysis. Moving Average Convergence/Divergence is a trend-following stock technical indicator. MACD indicator shows the correlation between two moving averages.


One moving average is of a shorter period and the other for a longer period of stocks price bars.

MACD Stocks Indicator Technical Analysis

MACD Stocks Indicator - MACD Stocks Indicator Technical Analysis



MACD stock indicator has a zero center line; values above zero line are bullish while those below zero are bearish.


In an upward stock trend the shorter MACD line rises faster that the longer MACD line this creates a gap. In addition as long as the MACD indicator is above the center mark the stock trend is still bullish as shown below.


Do not sell as long as the MACD Stock Indicator is above the Center Mark - this is bullish territory and it does not matter how it is moving as long as it is above the zero center mark, as shown on the stocks trading example explained below.

Bullish Stock Trading Signal

MACD Stock Indicator Above Zero Mark - Bullish Stock Trading Signal


In a downward stock trend the shorter MACD line falls faster than the longer MACD line this creates a gap. In addition as long as the indicator is below the center mark the stock trend is still bearish as shown below.


Do not buy as long as the MACD Stock Indicator is below the Center Mark - this is bearish territory and it does not matter how it is moving as long as it is below the zero center mark, as shown on the stocks trading example explained below.

Bearish Stock Trading Signal

MACD Stock Indicator Below Zero Center Line Mark - Bearish Stock Trading Signal


When the stock trend is about to reverse the MACD lines start to move closer to each other, thus closing the gap.

 

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