MACD

MACD is an acronym for Moving Average Convergence Divergence. This indicator is a tool that's used to identify moving averages that are indicating a new trend, whether it's bullish or bearish. It is a convergence/divergence, is a trading indicator used in technical analysis of stock prices, created by Gerald Appel in the late 1970s. It is designed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price.

MACD

• Moving Average Convergence Divergence (MACD) is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.

• MACD triggers technical signals when it crosses above (to buy) or below (to sell) its signal line.

• The speed of crossovers is also taken as a signal of a market is overbought or oversold.

• MACD helps investors understand whether the bullish or bearish movement in the price is increasing or decreasing in strength.

MACD

It is not uncommon for investors to use the MACD’s histogram the same way they may use the MACD itself. Positive or negative crossovers, divergences, and rapid rises or falls can be identified on the histogram as well. Some experience is needed before deciding which is best in any given situation because there are timing differences between signals on the MACD and its histogram.