Brothers! Dazed by price charts in crypto trading? Try MACD, this classic indicator, simple and practical! Today I’ll teach you in plain language!
What is MACD?
It’s like a 'speedometer' + 'accelerometer' for coin prices, helping you judge trend strength and turning points. It mainly consists of three parts:
DIF Line (Fast Line): Reflects short-term price momentum (commonly uses the 12-day moving average - 26-day moving average).
DEA Line (Slow Line): It is the 'smoothed version' of the DIF line, reflecting medium-term trends (commonly uses the 9-day moving average of DIF).
MACD Histogram: The most critical! It is the difference between DIF and DEA (DIF - DEA). The length of the bars represents the distance between the two lines, reflecting the strength of momentum!
How to interpret signals?
Golden Cross (Buy Signal!): The DIF line crosses above the DEA line, while the MACD histogram turns from green to red (or from negative to positive)! This indicates weakening downward momentum and strengthening upward momentum, possibly a buying opportunity! 👍
Death Cross (Sell Signal!): The DIF line crosses below the DEA line, while the MACD histogram turns from red to green (or from positive to negative)! This indicates weakening upward momentum and strengthening downward momentum, possibly a sell or wait signal! ⚠️
Strength is divided by the zero axis:
Above the Zero Axis (Bullish Zone): DIF and DEA are above the zero axis, MACD histogram is mostly red, overall trend is strong. A golden cross here is more reliable!
Below the Zero Axis (Bearish Zone): DIF and DEA are below the zero axis, MACD histogram is mostly green, overall trend is weak. Be more cautious of death crosses here!
Histogram shows momentum: Red bars getting longer = Acceleration of upward momentum! Green bars getting longer = Acceleration of downward momentum! Shortening bars = Weakening of current directional momentum, possible trend reversal!
Tips for using in the crypto space:
Don’t use alone! MACD has lagging characteristics; it’s more accurate when combined with candlestick patterns, trading volume, and support/resistance levels!
Trend is king! In a clearly upward trend, a death cross may indicate a pullback; in a clearly downward trend, a golden cross may indicate a rebound. Look at it in conjunction with the big trend!
Use with caution in volatile markets! Cryptocurrency markets experience sharp rises and falls, and MACD can easily generate 'false signals' during extreme fluctuations, don’t follow blindly!
Adjustable parameters: Default (12,26,9), if it feels too sensitive, you can try (24,52,9) for more stability.
One-sentence summary: Golden cross means upward red bars, death cross means downward green bars, strength is divided by the zero axis, combining with the trend is key! To learn more valuable knowledge, follow the professional trend analysis of Team D, doubling assets is not a dream.
