MACD signal-line cross
Trend / momentum · Difficulty: Beginner
The idea
MACD subtracts a slow average from a fast one and compares the result with its own smoothed signal line. A cross of MACD above the signal line suggests momentum is turning up.
Indicators and settings
MACD 12, 26, 9 with the histogram, and EMA 50 as a trend filter.
Entry rule
Consider a long when MACD crosses above its signal line (histogram turns positive) and price is above the 50 EMA. Crosses below zero are weaker than crosses above it.
Exit rule
Exit when MACD crosses back below the signal line, or the histogram shrinks for several bars while price stalls.
Stop-loss and risk rule
Stop under the latest swing low or 2 × ATR. Do not add to a position just because another cross appears.
Best conditions
Trending markets with clear swings.
Pitfalls
- Signals arrive after a lot of the move has happened.
- Many false crosses in choppy markets.
- Histogram bars alone are noisy: wait for closes.
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Illustration only; ignores slippage, tax and most costs. Not financial advice.