MACD
Moving Average Convergence Divergence
In short
#TradingMACD tracks the gap between two exponential moving averages of price, usually the 12-period and the 26-period, plus a 9-period signal line. It measures whether momentum is building or fading.
Why it matters
MACD gets quoted whenever someone wants to claim a trend is strengthening or weakening without saying so outright. Because it is built from averages it lags price, so its crossovers confirm moves rather than anticipate them. In sideways markets it produces a stream of crossovers that lead nowhere.
Example
The MACD line crosses above its signal line while both sit below zero. Analysts read this as downside momentum easing, not yet an uptrend, but a fall that is losing force.
Frequently asked
What is a MACD crossover?
It is the MACD line crossing its 9-period signal line. Crossing up is read as improving momentum, crossing down as deteriorating momentum. Its reliability drops sharply in range-bound markets.
What does MACD divergence mean?
Price makes a new high or low but MACD does not follow. It suggests the move is running on less momentum than the previous one. Divergence can persist for a long time before anything happens, if it happens at all.