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MACD Upward Crossover is a bullish signal which is generated when a short-term moving average to cross above a longer-term moving average. This upward crossover implies that there is an increasing upward momentum in the particular counter. This bullish crossover suggests that the price has recently been rising at a faster rate than it has in the past, so it is a common technical buy sign. Conversely, a short-term moving average crossing below a longer-term average is used to illustrate that the asset’s price has been moving downward at a faster rate, and that it may be a good time to sell.
Caution to be taken when applying this strategy:
1. Avoid to enter the market on the crossover day. Pause and watch the stock movement for another two days to observe whether the crossover is valid. The increasing buying volume and uptrend movement should remain intact to further reinforce the buying signals.
2. Never use a technical signal alone without other indicators. MACD is a powerful indicators, but it should be applied together with other indicators, chart reading, fundamental strength and trendlines.