Trade with MACD Fast Line and MACD Signal Line
How to Analyze MACD Fast Line & MACD Signal Line Strategies
MACD indicator uses various methods to give technical analysis information.
- MACD center line crossovers signal bullish or bearish price moves; below MACD zero center line is a bearish signal, above MACD zero center line is a bullish signal.
- MACD Center-Line Cross overs indicate a buy signal or a sell signal.
- MACD Indicator Oscillations can be used by stock traders to signal oversold and overbought levels
- MACD indicator can also be used to look for divergence between price and MACD.
Construction of MACD Indicator
MACD indicator is constructed using two exponential moving averages & this MACD indicator draws two lines. The two default exponential moving averages used are 12 & 26 EMA. Then a smoothing factor of 9 is also applied when drawing the MACD.
How MACD indicator is drawn - How to Read MACD Signals
MACD indicator uses 2 EMAs and a smoothing factor (12 EMA, 26 EMA & 9 smoothing periods)
MACD indicator only draws two lines - the MACD fast line and the MACD signal line
How Do I Read MACD Signals
- The MACD Fast-Line is the difference between the 26 EMA and 12 EMA
- The MACD Signal-line is the 9 period moving average of MACD fast line.
Implementation of MACD Indicator
MACD indicator implements the MACD line as a continuous line while the MACD signal line is implemented as a histogram. These 2 MACD LINES are then used to generate signals using the MACD crossover trading strategy method.
There's also the MACD center-line which is also referred to as zero center mark and it's a neutral point between the buyers & the sellers which are trading the market.
MACD values above the center line mark are considered as bullish signals while MACD values below the center line mark are considered as bearish signals.
MACD indicator is an oscillator - MACD indicator oscillates above and below the center line mark.
How Do I Read MACD Signals - How to Interpret MACD Indicator?
