EagleTrader has an in-depth discussion: long and short showdown on MACD zero axis! How to use the Golden Fork to capture trend turning points

In the field of technical analysis, MACD (Moving Average Convergence
Divergence indicators are widely favored by traders for their intuitiveness and effectiveness. In particular, the golden fork and dead fork signals near the zero axis of MACD often provide key market long and short conversion information. Therefore, in this article, EagleTrader will explore in-depth the principles and applications of trading signals near the MACD zero axis to help traders better grasp the market rhythm.

The long and short meaning of MACD zero axis

MACD indicator consists of DIF line (fast line), DEA line (slow line) and MACD bar chart. As the core reference line of MACD, the zero axis has important market significance:

Above the zero axis: It indicates that the market is in a bull-dominated state, and both the DIF line and the DEA line run above the zero axis, indicating that the buyer has strong strength.

Below the zero axis: It indicates that the market is in a bear-dominated state, and both the DIF line and the DEA line run below the zero axis, indicating that the seller has strong strength.

Near the zero axis: It is a key area for the game between bulls and bears, which often indicates that the market may undergo trend changes or acceleration.

Golden fork and dead fork signals near the zero axis

1. Golden fork (broad continuation signal) above the zero axis

Model characteristics: The DIF line passes through the DEA line from below, and both are located above the zero axis.

Market meaning: The bullish force re-dominates, which may be a signal that the trend continues.

Trading Strategy:

Stake increase point: When a golden cross appears above the zero axis, it can be regarded as a confirmation signal of the long trend, which is suitable for increasing positions or opening new long positions.

Stop loss setting: Low point or key before the golden cross is formedSupport level is used as a stop loss reference.

Target position: combine technical tools such as trend line and Fibonacci expansion position to set profit targets.

2. Dead cross (short acceleration signal) below the zero axis

Model characteristics: The DIF line passes through the DEA line from above, and both are located below the zero axis.

Market meaning: The further strengthening of bear power may be a signal of an acceleration of the downward trend.

Trading strategy:

Sales reduction or exit: When a dead cross appears below the zero axis, it can be regarded as a confirmation signal of a short trend, which is suitable for reducing or closing long positions.

Backhand short selling: If the market is in a short trend as a whole, consider opening a short position.

Stop loss settings: Use the high point or key resistance level before the dead cross is formed as the stop loss reference.

Target position: Set profit targets with technical tools such as support level and Fibonacci retracement level.

Precautions

Combined with other indicators: MACD zero-axis signal needs to be confirmed in combination with RSI, Bollinger bands and other indicators to avoid false signals.

Time period selection: The MACD signal meanings of different time periods are different, and it is recommended to use them on the daily line or 4-hour chart.

Risk Management: Strictly implement stop loss and position management to avoid excessive risk of a single transaction.

The golden cross and dead cross signals near the zero axis of MACD are important signs of the long-short power conversion and can provide traders with a clear basis for trend judgment. By deeply understanding its principles and combining them with practical applications, traders can capture more high-probability trading opportunities in complex and changeable markets.

However, any technical indicator is not omnipotent. Traders need to combine various factors such as market environment, capital management and psychological control to achieve long-term and stable profits.