Moving Average Convergence Divergence (MACD) is a technical indicator used in trading to help identify price trends and potential entry and exit points for trades. It's used by traders in stock, bond, commodities, and FX markets.
How it works
MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.
The MACD line is plotted on a chart along with a signal line, which is a nine-period EMA of the MACD line.
The MACD line crosses above the signal line when the 12-period EMA is above the 26-period EMA.
The MACD line crosses below the signal line when the 12-period EMA is below the 26-period EMA.
A histogram is often displayed with the MACD line to show the distance between the MACD and the signal line.