MACD signal-line cross

Trend / momentum · Difficulty: Beginner

Education only. Delayed data. Past results do not predict future results. Not financial advice, and no strategy here promises a profit. Every strategy can lose money, and a rule that worked on past charts may stop working. Practise with virtual money first.

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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.