One signal that has been the most reliable for me is the MACD Crossover. In a bull market I look for bullish crossovers and in a bear market… well, I look for bearish crossovers. In all fairness there is a little more too it than that but in my trading this has been the most lucrative indicator in my trading toolbox.

Here are examples of each and some other ways these patterns can help you find winners. Take a look:

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This is a chart of CROCs and it is a perfect demonstration of how effective the Bullish Crossover signal is. (in fact I placed a call trade as soon as I saw this even though I was just looking for an example). You can see in the MACD at the bottom of the chart that when the black line (representing the longer trend) crosses up above the red line (representing the shorter term trend) the stock continues to go up.

Keep in mind that this is a bit of a leading indicator but more of a confirming indicator as it won’t make that curve up until the price has had enough upward movement to break the downward trend.

The other thing that is ideal about this example is that the most recent crossover happens pretty low on the MACD. When it gets that oversold and can break the trend with a reversal the result is often a strong move to the upside.

You can see that you get a similar result when you look at the Bearish Crossover, where the black line crosses below the red line.

Another way to use these signals is to create a scan for them in your favorite charting software. Often the list that results from this scan will show a number of tickers in the same sector. That will indicate broader strength in that move and further confirm the signal.

Hope this is helpful!

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily