MACD Mastery: The Only Guide You’ll Ever Need

 

What is the DIFF line?

If you look at the above chart, you can find that there are two lines. One is blue, and the other is yellow. The yellow line is a slow line based on a 26-day moving average, and it is known as the diff line.

What is the DEA line?

This line is blue, and it is based on a 9-day moving average and is always considered a fast-moving line.

If the distance between the two is great, it means that the energies of both types of moving averages are different. Currently, it shows that both moving averages look similar, and there is no difference between moving averages. Both lines are helpful for taking long and short positions.

Zero axis

If you look at the chart, you also find an arrow that indicates the zero-axis position. Traders use the zero axis to take long and short positions. For example, if both moving averages, DEFF and DEA, are below the zero axis, it means it is not the time to take a risk and use a short position, and if it is above the zero axis, it is the time to take a long position.

Golden Cross

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Golden Cross

If you find the DIF line crossed the DEA line, the slow-moving average crosses the fast-moving average and goes upward. Technically, it is considered a golden cross. It means that the prices stop falling and are rising again. If both lines are above the zero axis, it shows the bull market. For traders, this is the most suitable time to make big gains from a new wave.

If both DIF and DEA are below the zero axis, it will indicate that this is a short-term rebound, and its stability and reliability are always questionable.

In a specific scenario, when both DIF and DEA are making a golden cross below the zero axis, it will indicate that the current trend has more strength and traders can trust it.

Death Cross

If both lines cross from top to bottom, this will show a sharp drop in prices; if it is above the zero axis, it will indicate a callback in the bull market. If it is below the zero axis, this is a quick indication of the further decline in prices, and you must exit the market.

In summary, you can use this indicator in a variety of ways, but a basic understanding is required. There are many techniques and tricks to use this indicator. Thanks for reading this article.