What Is Moving Average Convergence Divergence (MACD)?
MACD is a trend-following momentum indicator that shows the relationship between two exponential moving averages of price.
Quick Answer
MACD is a trend-following momentum indicator that shows the relationship between two exponential moving averages of price.
What Does MACD Measure?
The Moving Average Convergence Divergence (MACD) was developed by Gerald Appel in the late 1970s. It consists of the MACD line (difference between 12 and 26-period EMAs), a signal line (9-period EMA of MACD), and a histogram showing the difference between them. MACD helps identify trend direction, momentum, and potential reversals.
MACD Line = 12-period EMA - 26-period EMA; Signal Line = 9-period EMA of MACD LineHow to Read MACD
- 1MACD crossing above signal line is bullish
- 2MACD crossing below signal line is bearish
- 3Histogram expansion shows increasing momentum
- 4Divergence between MACD and price signals potential reversals
How to Use MACD in Trading
MACD Settings
| Setting | Default | Description |
|---|---|---|
| Fast Period | 12 | Period for fast EMA |
| Slow Period | 26 | Period for slow EMA |
| Signal Period | 9 | Period for signal line EMA |
Common Mistakes to Avoid
Use MACD in VaultCharts
VaultCharts includes Moving Average Convergence Divergence with customizable settings. Combine it with our automated pattern detection and trade signals for better analysis.