MACD (Moving Average Convergence and Divergence) is a momentum indicator that can help either in trend following or reversals as well. Just with the help of simple crossover technique you can catch amazing reversals across asset classes.
Whenever MACD line crosses above the signal line this indicates a bullish crossover, on the other hand when MACD line crosses below the Signal line this indicates a bearish crossover. However, one cannot rely only on MACD and price confirmation is also very important along with Elliott wave pattern.
Below research shows that prices have reversed from the channel resistance but we are yet to see break below the important support level which is near 430 levels i.e. the Gap area.
MCX copper daily chart:
Above is the daily chart of MCX copper and we can see the overlapping move that has been witnessed since the month of October. An amazing way of capturing reversal would have been identifying the support or resistance zones and waiting for MACD confirmation for going all in for the upcoming trend.
If we observe the MACD indicator, the crossovers have been marked with circles and after the crossovers we can see the distance increasing between both the MACD line and singal line, confirming the emerging trend.
Also the recent price action is similar to what we observe in the past. However, it is important to wait for prices to break below the support level provided by the Gap area near 430. Move below this might result into a quick move on downside which is also confirmed by indicator. On upside 460 is important level to watch and break above the same would provide positive trade setup.
In a nutshell, Copper is at crucial juncture and break of either above 460 or below 430 will provide good positional trade in that direction. This shows how to use indicator along with price confirmation and not just rely on indicator crossover that majority of the traders do resulting into losses.
You can also read the earlier research on Silver that we were able to capture for nearly 7.5% move. You can read it here.
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