MACD Crossover Strategy

What It Detects

Stocks with:

• MACD line crossing above signal line (bullish crossover)
• Price in uptrend (above 200-day MA)
• Momentum shifting positive
• Early entry before big move

The Formula

Copycross_above(macd(), macd_signal()) and c > sma(200)

How It Works

1. cross_above(macd(), macd_signal()) - MACD line just crossed above its signal line
2. c > sma(200) - Price is above 200-day moving average (uptrend)

This catches the exact moment momentum turns positive in a trending stock.

When to Use

Best for:

• Swing trading (hold 2-6 weeks)
• Catching trend resumption after pullback
• Medium to long-term trend following
• Lower-frequency trading

Avoid when:

• Choppy, sideways markets (false signals)
• Very short-term trading (too slow)
• Stocks in downtrend (catches dead cat bounces)

MACD Basics

Components:

• MACD Line: 12-day EMA - 26-day EMA
• Signal Line: 9-day EMA of MACD
• Histogram: MACD - Signal

Crossover:

• Bullish: MACD crosses above Signal → buy signal
• Bearish: MACD crosses below Signal → sell signal

Parameters You Can Tweak

Strong Trend Only

Copycross_above(macd(), macd_signal()) and c > sma(200) and sma(50) > sma(200)

• Adds 50-day > 200-day filter
• Only trades strongest uptrends

With Volume Confirmation

Copycross_above(macd(), macd_signal()) and c > sma(200) and v > sma(v, 20) * 1.5

• Requires 1.5x volume on crossover day
• More reliable signals

Large Caps Only

Copycross_above(macd(), macd_signal()) and c > sma(200) and f.market_cap > 10B

• Focus on liquid, institutional stocks
• Smoother trends, fewer fakeouts

Add Price Confirmation

Copycross_above(macd(), macd_signal()) and c > sma(200) and c > sma(20)

• Price must be above 20-day MA
• Confirms short-term momentum

Example Columns to Add

CopyPrice: c
MACD: macd()
Signal: macd_signal()
Histogram: macd_hist()
200MA: sma(200)
RSI: rsi(14)
Chg%: roc(1)

Entry Strategies

Conservative (Wait for Confirmation)

1. MACD crossover appears on scan
2. Wait for price to break above recent high
3. Enter on pullback to support
4. Stop below MACD crossover day low

Aggressive (Immediate)

1. MACD crossover appears on scan
2. Check histogram turning positive
3. Enter at close or next morning
4. Tight stop (3-5%)

Pullback Entry

1. MACD crossover happens
2. Wait for price to pull back to 20-day MA
3. MACD stays positive (no re-cross)
4. Enter when price bounces off MA

Exit Strategies

Take Profits:

• MACD crosses back below signal (bearish crossover)
• Price breaks below 20-day MA
• RSI reaches 70+ (overbought)
• Target hit (10-20% depending on timeframe)

Stop Loss:

• Below MACD crossover day low
• Below 50-day MA (trend failure)
• 7-10% below entry (swing trade stop)

Signal Quality

High Quality Signals

• MACD crossing from below zero line (new uptrend)
• Histogram has been negative for weeks (oversold)
• Price holding above key moving averages
• Market trending up (SPY bullish)

Low Quality Signals

• Multiple crossovers recently (choppy)
• MACD crossing near zero (weak momentum)
• Price below 50-day MA (downtrend)
• Market in correction

What to Watch For

Strong signals:

• First crossover after long decline
• Histogram turning from negative to positive
• Price making higher lows
• 200-day MA sloping up

Warning signs:

• Crossover immediately after bearish cross (whipsaw)
• Price breaking support levels
• Volume declining on crossover
• 200-day MA flattening or declining

Common Mistakes

1. Trading every crossover - Wait for high-quality setups
2. No trend filter - MACD is useless in sideways markets
3. Ignoring price action - Confirm with chart patterns
4. No stop loss - MACD can be wrong, protect capital
5. Overtrading - MACD is for swing trades, not day trading

Combining with Other Indicators

MACD + RSI

Copycross_above(macd(), macd_signal()) and c > sma(200) and rsi(14) > 40 and rsi(14) < 60

RSI between 40-60 = healthy momentum without extremes

MACD + Price Pattern

Copycross_above(macd(), macd_signal()) and c > sma(200) and c > sma(20) and (c - l) / (h - l) > 0.5

Adds bullish candlestick filter (close in upper half of range)

MACD + Trend Strength

Copycross_above(macd(), macd_signal()) and c > sma(200) and (c - sma(200)) / sma(200) * 100 < 20

Price within 20% of 200-day MA (not overextended)

Timeframe Considerations

Daily Charts (Standard)

• Hold 2-6 weeks
• Use 12/26/9 settings (default)
• Best for swing trading

Weekly Charts (Longer-term)

• Hold 2-6 months
• Use same settings on weekly data
• Fewer but higher quality signals

Intraday (Not Recommended)

• Too many false signals
• Better indicators exist for day trading

Related Strategies

• Momentum Breakout - Price-based momentum
• Oversold Bounce - Counter-trend entries
• Volume Spike - Add volume confirmation

Pro Tips

• Best setups: MACD crossing near zero after pullback
• Confirm with chart: Look for consolidation before crossover
• Market filter: Only trade MACD crossovers when SPY is above its 200-day MA
• Risk management: Size smaller on crossovers near resistance
• Multiple timeframes: Check weekly MACD for trend confirmation
• Histogram divergence: Watch for price making new lows while histogram makes higher lows (bullish)
• Patience pays: Wait for the cleanest setups, not every crossover

Advanced: Divergence Trading

Bullish Divergence

Price makes lower low, MACD makes higher low → reversal likely

Bearish Divergence

Price makes higher high, MACD makes lower high → top forming

Note: Divergence signals are more advanced and require chart analysis beyond the scan.