MACD Technical 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 oil signals are generated.

MACD Crude Oil Indicator - Example of MACD Technical Indicator

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

Buy Oil Trade

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

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

In the oil example shown below, the Moving average oil indicator generated a buy oil signal, before crude oil price started to move up. But it wasn't until the MACD moved above the zero line that the buy oil signal was confirmed, and the Moving Averages also gave a crossover oil 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 Crude Trading Indicator - Buy Trading Signal

Sell Oil Trade

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

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

In the oil example displayed 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 oil signal.

Where to Sell using MACD Crude Oil Indicator - Sell Trading Signal