MACD consists of two index smooth moving averages (EMAs) and a bar chart, used to study changes in stock price trends and the strength of market momentum. The intersection of MACD lines and the color change of bar charts are often used as a basis for judging buying and selling signals.
As friends who speculate in stocks know, MACD is one of the most commonly used indicators among various technical indicators of stocks, and it is also an important indicator for analyzing stock prices. However, many stock market professionals are not familiar with MACD. Let's take a look together. What is the MACD indicator, and how should MACD lines be viewed?
MACD, also known as the Similarity Moving Average in Chinese, is a major trend indicator developed from the dual index moving average. The MACD indicator consists of five parts: long-term moving average MACD, short-term DIF, red energy bar, green energy bar, and 0-axis. The MACD indicator uses the intersection of the long-term MACD and short-term moving average DIF as signals to reflect the current bullish and bearish conditions and the possible future trends of stock prices.
When investors buy stocks, they should follow the law of buying with a golden fork and selling with a dead fork. MACD has two lines: red belongs to the fast line, blue belongs to the slow line, and red fluctuates more and blue fluctuates less. When the red line on the MACD crosses the blue line, it is the golden cross of the MACD. Generally, the stock is not easy to fall after the golden cross, so the appearance of the golden cross is a signal to buy the stock. On the contrary, when the red line crosses the blue line, it is a dead cross, and the dead cross is a signal to sell the stock.
Investors can also observe the red and green bars of MACD, which represent the power of long and short positions. When the MACD bar is red and continues to diverge, it usually indicates that the stock market is in a rapid upward state with strong upward momentum and is a signal to buy stocks. When the MACD bar is red and begins to contract, it indicates that the momentum of the stock market's rise has begun to decline and the stock price will start a new downward trend, which is a signal of selling stocks; When the MACD bar is green and continues to diverge, it indicates that the stock market is in a rapid decline stage and is a signal to sell stocks. When the MACD bar is green and gradually converging, it often indicates that the sharp decline phase of the market has ended and is a signal to buy stocks.
In addition, if there is a situation where the stock price point is higher than the high point of the previous wave, but the high point of MACD is lower than the high point of the previous wave, it indicates that the stock price may fall quickly, which is called a "bull deviation." When the low point of the stock price appears lower than the low point of the previous wave, but the low point of MACD is higher than the low point of the previous wave, it indicates that the stock price will quickly reverse and rise, and this signal is called a "bear deviation".
Although MACD is an important indicator for judging the stock market situation, relying solely on the MACD line to determine the stock market still has certain limitations. There are many factors that affect the stock market, and investors still need to conduct comprehensive analysis. MACD can only serve as a reference.
Finally, I would like to remind everyone that although stocks may generate high returns, they are also high-risk investments. To invest in stocks, investors need to have strong risk resistance and possess some professional knowledge and technology in the stock market; otherwise, they should not easily enter the market.