Draw a trendline based on MACD

Using the highs and lows formed on the MACD, we can precisely identify the top and bottom of the price chart. Based on this, you can remove the drawing trendline subjectively.

At the same time, you rely on the trendline to capture and evaluate the current trend, thereby building your trading plan.

In the chart below, you can see an uptrend line drawn by connecting two lows based on the MACD indicator. We see that the back bottom is higher than the previous one on the price chart to coincide with the bottom formed on the MACD.


In the next chart, we also draw a downtrend line by connecting 2 lower highs and coinciding with 2 peaks formed on the MACD indicator.


Trading idea

To enter the trade, we use the trendline breakout signal to capture the timing of the trade and use the MACD as the signal to trigger an entry point.

To understand more about this transaction, please go into the rules of the transaction.

Trading principles

For buy setup

Our strategy consists of 4 steps:
  • Wait for the price to break through the downtrend line
  • The value of the MACD Histogram must move from below zero to above zero.
  • After the above 2 conditions are met, we can now open a long position above the high of the candle at the time the MACD goes above zero. And place the stop loss below the low of that candle.
  • Set profit targets with 1: 2 RR or rely on ATR to take profit.
Below is an example of a buy setup:


For sale setup

Sell setup is similar, consisting of 4 steps:
  • Wait for the price to break through the uptrend line
  • The value of the MACD Histogram must move from above zero to below zero.
  • After the above two conditions are met, we can now open a short position below the low of the candlestick at the time the MACD breaks below zero and place the stop loss above the highest price of that candlestick.
  • Set profit targets with 1: 2 RR or rely on ATR to take profit.
Below is an example of a sell setup: