How to interpret the MACD indicator? Guidelines for using the MACD red and green bars

How to interpret the MACD indicator? The significance of MACD is quite similar to that of the dual moving averages, but it is easier to read. When MACD shifts from negative to positive, it signals a buy. When MACD shifts from positive to negative, it signals a sell. Significant changes in MACD at a large angle indicate that the gap between the fast and slow moving averages is widening rapidly, representing a major market trend reversal.

The MACD indicator consists of the DIF line, DEA line, MACD histogram, and the zero line—these are the "three lines and one axis." The DIF line is the difference between the 12-day EMA( fast moving average) and the 26-day EMA( slow moving average). The DEA line is the 9-day EMA of the DIF line.

Beginners in the crypto space are often very familiar with trading volume and the red and green bars on candlestick charts, but may not understand the MACD's red and green bars. First, let's clarify the MACD indicator, which includes two lines, red and green bars( as shown in the figure), along with a zero axis.

Guidelines for using the MACD red and green bars:

- After a period of price increase, if a new high appears on the 30-minute chart, the red bars indicate the release of bullish energy. The market is likely to transition into consolidation or a decline afterward.

- After a period of price decrease, if a new low appears on the 30-minute chart, the green bars indicate the release of bearish energy. The market is likely to transition into consolidation or an upward move afterward.