Let’s talk about this MACD death cross after $MAGIC 4 hours. First, it’s important to understand two limitations of the indicator:
First, it lags. MACD is calculated using moving averages, so by the time a death cross appears, the price has usually already moved some distance from its peak.
Second, it doesn’t work well in choppy markets. In a range-bound market, golden crosses and death crosses appear repeatedly, producing many false signals.
Before this crossover, the reverse histogram bars lasted for only 7 four-hour candlesticks, which is a short period, so watch out for repeated crossovers. Also, since it’s above the zero line, it’s best to view this as a pullback for now; it may not be a reversal.
First, it lags. MACD is calculated using moving averages, so by the time a death cross appears, the price has usually already moved some distance from its peak.
Second, it doesn’t work well in choppy markets. In a range-bound market, golden crosses and death crosses appear repeatedly, producing many false signals.
Before this crossover, the reverse histogram bars lasted for only 7 four-hour candlesticks, which is a short period, so watch out for repeated crossovers. Also, since it’s above the zero line, it’s best to view this as a pullback for now; it may not be a reversal.