MACD Cross on Nasdaq Chart

The MACD (Moving Average Convergence Divergence) is a popular technical indicator used to identify potential buy and sell signals on stock charts. It involves two lines: the MACD line and the Signal line. A “MACD cross” refers to the point where these two lines intersect, which can signal a change in trend.

The Idea

This is a classic MACD crossover strategy with a tiny twist. The entry signal comes when the two lines cross (and the histogram crosses over 0), and the exit signal is given when the histogram has been climbing upwards for three days in a row. To ensure the market has a decent overall momentum we avoid trades if MACD is at its 20-period highest.

Setup for Backtest

Market: US Tech 100 (Nasdaq 100)

Contract: 1 € per point

Broker: IG

Testing environment: ProRealtime 12

Timeframe: Daily

Time zone: CET

No fees and commissions are included.

Result

Total gain: 5 165.3 €

Average gain: 19.6€

Total trades: 264

Winners: 175

Losers: 86

Breakeven: 3

Max drawdown: –593.7 €

Risk/reward ratio: 1.4

Total time in the market: 6.7 %

Average time in the market: 2 days, 6 hours

CAGR (10 000 € in starting capital): 2.71 %

Understanding MACD Cross:

1. MACD Line: This is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA.
2. Signal Line: This is a 9-day EMA of the MACD line.

Types of MACD Crosses:

Bullish MACD Cross (Golden Cross):

• Occurs when the MACD line crosses above the Signal line.
• This is generally interpreted as a buy signal, indicating that the stock may be starting an uptrend.

Bearish MACD Cross (Death Cross):

• Occurs when the MACD line crosses below the Signal line.
• This is generally interpreted as a sell signal, indicating that the stock may be entering a downtrend.

Example of How to Use MACD Cross:

1. Look for the Cross:

• On a Nasdaq stock chart, observe when the MACD line crosses the Signal line.

1. Confirm with Volume:

• Higher trading volume on the cross can strengthen the signal.

1. Set Entry/Exit Points:

• A bullish cross might be a good entry point for buying.
• A bearish cross might signal a time to sell or short the stock.

Using MACD Cross on the Nasdaq:

• Monitor Major Stocks: Look for MACD crosses on major Nasdaq-listed stocks like Apple (AAPL), Microsoft (MSFT), or Tesla (TSLA).
• Combine with Other Indicators: For a more reliable signal, combine the MACD cross with other indicators like RSI (Relative Strength Index) or support and resistance levels.

Entry Conditions

1. MACD crosses over 0.
2. MACD is less than its highest 20-period value.

Exit Conditions

1. MACD is up three days in a row.

If you’re interested in identifying the latest MACD crosses on specific Nasdaq stocks, I can help you look up real-time data or show you how to set up these indicators on a charting platform.