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MACD indicator also known as Moving Average Convergence/Divergence is an important tool for traders to depict when the trend reversal is going to happen. It works as a confirmation add-on for traders on their technical chart analysis.
The MACD indicator is formed of two different moving averages, 12 MA and 26 MA. The moving average is the average closing price of the past 12 candles and 26 candles respectively.
The trend reversal in the candlestick chart can be easily forecasted with the help of the MACD indicator.
The 12 MA is also known as the fast line and the 26 MA is also known as the slow line. These lines move simultaneously on the MACD chart to help traders in catching the momentum of trend reversals in the candlestick chart.
There is no set criterion to decide the number of candles for the MACD chart. The default format for lines of moving averages is 12 and 26. But, it can be adjusted according to the knowledge and needs of traders.