MACD Analysis Buy and Sell Trading Signals

Since the MACD indicator uses 26 and 12 EMA to plot, we shall compare these two EMAs with the MACD indicator to determine how these buy & sell signals are generated.

MACD Commodity Indicator - Example of MACD Technical Indicator

The MACD indicator is a leading indicator meaning it generates signals that are leading compared to commodities price action as opposed to lagging indicators that lag behind the price.

Buy Commodities Trade

A buy trade is generated when there is a MACD fast line crosses above signal line. However, as with any leading indicator these commodity signals are prone to whip-saws/fake outs.

To eliminate the whipsaws it's good to wait for confirmation of the buy or sell signals. The confirmation commodity signal is when the two lines cross above the zero mark, when this happens the buy generated is a reliable signal.

In the commodity example illustrated and demonstrated below, the Moving average commodity indicator generated a buy signal, before 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 commodity 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 Commodity Trading Indicator - Buy Trading Signal

Sell Trade

A sell signal is generated when there is a MACD fast line crosses below signal line. However, just like the buy signal, these are also prone to whipsaws/ fake outs.

To eliminate the whipsaws it is good to wait for confirmation of the sell signal. The confirmation is when the 2 lines cross below the zero mark, when this happens the sell generated is a reliable signal.

In the commodity example illustrated and demonstrated 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 cross-over signal.

Where to Sell using MACD Commodity Indicator - Sell Trading Signal