So, How Do You Spot a Trend?
To identify a trend, we turn to certain indicators — specifically, the MACD and moving averages.
These are known as lagging indicators, meaning they confirm a trend after it has started. That means you might enter a bit late, but the trade-off is greater accuracy — less risk of getting it wrong.
Example Time: GBP/USD Daily Chart
In the chart above, we’ve added the 10 EMA (blue), 20 EMA (red), and the MACD.
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Around October 15, the 10 EMA crossed above the 20 EMA — a classic bullish crossover.
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At the same time, the MACD also made an upward crossover, signaling a potential buy.
If you had gone long back then, you would’ve caught a nice upward move. 📈
Later on, both indicators also gave sell signals, and sure enough, strong downtrends followed.
If you had taken those short trades, you’d likely be smiling all the way to the bank. 💸
But Be Careful — Fakeouts Happen
Now let’s look at another example, just to show you that lagging indicators aren’t foolproof.
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On March 15, the MACD flashed a bullish crossover — but the moving averages didn’t confirm it.
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If you bought based on the MACD alone, that was a fakeout. Ouch.
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Again, near the end of May, MACD gave another buy signal, but still no support from the moving averages.
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If you went long, you probably got caught in a small dip and ended up with a loss.
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Double ouch. 😬
The Bottom Line:
While lagging indicators like MACD and moving averages can help you confirm trends, they’re not perfect.
Use them wisely — and look for confirmation across multiple indicators before making a move.
No signal should be trusted blindly — especially if the others are staying silent.