MACD — Moving Average Convergence Divergence — turns two moving averages into a single momentum indicator, showing when a trend is gaining or losing steam through crossovers and a histogram.
MACD (Moving Average Convergence Divergence) is built from moving averages. The MACD line is the difference between a fast EMA (usually 12-period) and a slow EMA (usually 26-period). When the fast average pulls away from the slow one, momentum is strengthening; when they converge, momentum is fading.
The classic signal is a crossover: when the MACD line crosses above the signal line it's bullish; crossing below is bearish. Crossing the zero line confirms a shift in the underlying trend. A growing histogram says momentum is accelerating; a shrinking one warns it's stalling.
Like the RSI, MACD flashes divergence when price and the indicator disagree, hinting a trend may reverse. Because it's built from moving averages, MACD lags price and can whipsaw in choppy, sideways markets — so traders confirm it with support and resistance.
See momentum shift live: MACD is all about a trend speeding up or slowing down. Feel those shifts trading a moving chart in the day trading simulator.
Not advice: educational content only. For authoritative basics see the SEC at investor.gov.
Related: moving averages explained, the RSI indicator, and technical analysis basics.
MACD, or Moving Average Convergence Divergence, is a momentum indicator built from two moving averages. It shows when a trend is gaining or losing strength through crossovers and a histogram.
The MACD line (fast EMA minus slow EMA), the signal line (a 9-period EMA of the MACD line), and the histogram (the gap between the two, shown as bars).
A crossover is when the MACD line crosses its signal line. Crossing above is a bullish signal and crossing below is bearish; crossing the zero line confirms a trend shift.
Because it is built from moving averages, MACD lags price and can give false signals or whipsaw in choppy, sideways markets, so traders confirm it with other tools.