MACD Analysis Buy and Sell Signals
Since the MACD cryptocurrency indicator uses 26 and 12 Exponential Moving Average to plot, we shall compare these two EMAs with the MACD indicator to determine how these buy & sell cryptocurrency signals are generated.
MACD Indicator - Example of MACD Technical Indicator
The MACD technical indicator is a leading indicator meaning it generates bitcoin signals that are leading compared to bitcoin price action as opposed to lagging indicators that lag behind the bitcoin price.
Buy BTCUSD Trade
A buy bitcoin trade is generated when there's a MACD fast line crosses above the signal line. However, as with any leading indicator these cryptocurrency signals are prone to whip-saws/fake-outs.
To eliminate the whipsaws it's good to wait for confirmation of the buy or sell cryptocurrency signals. The confirmation cryptocurrency signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable bitcoin signal.
In the cryptocurrency example illustrated below, the MAs cryptocurrency indicator generated a buy bitcoin signal, before bitcoin price started heading upward. But it wasn't until the MACD moved above the zero line that the buy cryptocurrency signal was confirmed, and the Moving Averages also gave a crossover 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 Indicator - Buy Signal
Sell Bitcoin Trade
A sell cryptocurrency signal gets generated when there's a MACD fast line crosses below signal line. However, just like the buy bitcoin signal, these also are prone to whipsaws/ fake outs.
To eliminate the whipsaws it's good to wait for confirmation of the sell crypto signal. The confirmation is when two lines cross below zero mark, when this happens the sell generated is a reliable bitcoin signal.
In the cryptocurrency example illustrated below, the MAs generated a sell confirmed after MACD moved below the zero line at the same time that the Moving Averages gave a cross over bitcoin signal.
Where to Sell using MACD Indicator - Sell Signal
