I’ve always believed that MACD is the most practical indicator in technical analysis, but few people truly know how to use it flexibly. Recently, many have asked me how to use MACD to catch buy signals, especially regarding the details of the golden cross below the zero line. Today, I want to share my practical experience.

Honestly, MACD may seem complicated, but at its core, it revolves around the interaction between the DIF and DEA lines, along with the changes in the histogram. Many people only look at the surface, so their buy and sell timing is always a bit off. I’ve found that real experts combine these different aspects to analyze the signals.

Let’s start with the most basic judgment. When both DIF and DEA are above the zero line and continue to rise, it’s a clear bullish signal, and you can confidently hold your position. Conversely, if they are both below the zero line and trending downward, it’s a bearish sign, and it’s better to stay on the sidelines. But the most interesting part is the turning points in the middle. When DIF and DEA are both below zero but suddenly start moving upward, it often signals a trend reversal, and the price is about to stop falling and rebound.

The golden cross below the zero line is a pattern I pay special attention to. When DIF crosses above DEA below zero, it’s called a golden cross. When this signal appears at a low point, it often indicates that the main players are starting to buy in, and the selling pressure has nearly exhausted itself. My experience is that if the first golden cross is followed by a short red bar, and then another golden cross occurs with the red bars beginning to expand, the quality of this buy point is particularly high.

The changes in the histogram are also crucial. When the green bars start to shrink, it indicates that the downward momentum is weakening, which is a bottoming signal. Coupled with the appearance of a golden cross below zero, it can basically confirm a bottom reversal. I’ve seen several times when the green bars reach their smallest and the red bars begin to grow, that’s often the start of a strong rebound.

There are also a few patterns I frequently watch for. For example, “Little Duck Emerging from Water,” which occurs when DIF crosses above DEA below zero but doesn’t immediately cross above zero, instead retraces and forms a death cross, then crosses above again after a few days. This pattern usually appears during the bottoming phase and indicates that the main players are accumulating positions at low levels. Another is “Bottom Cable,” where MACD has been operating below zero for a long time, with DIF and DEA tightly hugging each other, then suddenly diverging upward—this is also a typical bottom signal.

However, I must say that MACD has its obvious shortcomings. It’s a medium- to long-term indicator and reacts relatively slowly. If the market fluctuates within a small range or consolidates, acting solely on MACD signals might lead to quick exits and small profits. More seriously, when the market experiences a sudden large move, MACD often can’t react in time because its movements are quite smooth, causing the indicator to become ineffective.

Therefore, my advice is not to rely solely on MACD. Combine it with candlestick patterns, volume, overall market trend, and key signals like the golden cross below zero to improve your success rate. Every indicator has its strengths and weaknesses; the key is to know when to use which tool. Especially in ranging or choppy markets, MACD’s value diminishes significantly and can even produce confusing signals. Currently, I prefer using multiple indicators together to avoid being misled by the lagging nature of any single tool.