MACD
Moving Average Convergence/Divergence (MACD)
Section titled “Moving Average Convergence/Divergence (MACD)”MACD is a trend-following dynamic indicator that shows the correlation between two Moving Averages of a price.
MACD Technical Indicator
Section titled “MACD Technical Indicator”The MACD Technical Indicator is the difference between a 26-period and 12-period Exponential Moving Averages (EMA). It includes a signal line, which is a 9-period moving average of the indicator.
Three Popular Ways to Use MACD
Section titled “Three Popular Ways to Use MACD”MACD can be used for crossovers, overbought/oversold conditions, and divergences in trading.
MACD Trading Rule
Section titled “MACD Trading Rule”Sell when MACD falls below its signal line and buy when MACD rises above its signal line. Buying/selling when MACD crosses above/below zero is also common.
MACD as Overbought/Oversold Indicator
Section titled “MACD as Overbought/Oversold Indicator”When the shorter moving average diverges significantly from the longer moving average (MACD rises), it suggests that the symbol price is overextending and may soon return to more realistic levels.
MACD Divergence
Section titled “MACD Divergence”Divergence occurs when the MACD indicator is making new highs/lows while prices fail to reach new highs/lows. These divergences are most significant at relatively overbought/oversold levels.