The golden cross and death cross in the MACD indicator are the most commonly used basis for investors to determine entry points in the market. When the slow line crosses above the fast line from below, it is a golden cross; when the slow line crosses below the fast line from above, it is a death cross.
A golden cross indicates a bullish outlook for the market, while a death cross indicates a bearish outlook. I think that relying solely on golden and death crosses is not very useful.
When the market is still continuing to rise or fall, and there is a divergence in the MACD indicator at the top or bottom, it may indicate that the market is nearing its end. What is divergence? Divergence means "to go in opposite directions." The MACD indicator rises as the market rises and falls as the market falls.
When the market continues to rise but the MACD indicator does not rise with it; when the market continues to fall but the MACD indicator does not fall with it: this is called MACD divergence.
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MACD divergence can be classified into top divergence and bottom divergence. When the market continuously reaches new highs while the high points of the fast and slow lines in the MACD indicator continue to decline, this is called top divergence. When the market continuously reaches new lows while the low points of the fast and slow lines in the MACD indicator continue to rise, this is called bottom divergence. When we observe top or bottom divergence in the market, and combine it with the characteristics of the wave theory previously discussed regarding the end of the 5-wave trend, we can conclude that the market has reached its final stage.
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MACD divergence is an important characteristic of the market's final stage. Looking at the chart: if the price continues to reach new lows while the fast and slow lines of the MACD indicator do not reach new lows, it indicates that the market may be nearing its end. If, in addition, the market drops after completing the 5-wave trend and there is divergence in the fast and slow lines of the MACD indicator at the low point of the 5-wave trend, then the likelihood of the market ending is even greater.