How to identify the bullish and bearish trend by using MACD?

Application of MACD

In the last chapter, we have introduced DIFF (fast line) and DEA (slow line); although the two lines are developing in the same direction, the fluctuation of the fast line is larger than slow line. Therefore, if the fast line crossover with slow line, there will be a clearer long-short direction.

Golden Cross
When MACD (blue line) crosses above the signal line(red line), it is a golden cross, and the trend is bullish.
Suitable for buying long orders and selling short orders

Death Cross
When MACD (blue line) crosses below the signal line (red line), it is a death cross, and the trend is bearish.Suitable for buying short orders and selling long orders

The Bar Graph
Green bars turn red, suitable for long positions; red bars turn green, suitable for short positions

In addition, the bar graph also reflects the trend of the bulls or bears
1. When the red bar becomes longer, longing’s momentum enlarging.
2. When the green bar becomes longer, shorting’s momentum enlarging.

How to use MACD with KD

Do you find that the application of MACD and KD are very similar? In fact, the principles of the two are similar, but the characteristics are slightly different. The following will show readers how to use dual indicators to identify the daily quotes.

The KD indicator responds quickly to the market, but it is prone to noise and unfavorable operations. If only KD is used, entanglement is easy to occur, and the current market cannot be effectively identified when entangled. If it can be used with MACD as confirmation, the accuracy can be improved. MACD is slower to respond, but with less noise, and can more accurately reflect trends. If KD is used with MACD, the trend is quite obvious. Therefore, it is strongly recommended investors to use the two indicators together.

Risk Reminder

• Most of the time, the market will still be affected by market news and will not follow the established pattern.
• Investors can match other technical indicators to improve trading winning rate
• The most important for investment is set ready the profit and stop loss before entering the market
• Once the stop loss is broken, you must keep your promise and leave the market to protect your capital

See more:
What Is Stochastic Oscillator(KD)
How To Use KD To Determine Buying And Selling Signals?
How to identify the bullish and bearish trend by using MACD?

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