JoymistaWhat Is the MACD Indicator and How Does It Work?
MACD is a momentum and trend indicator: its line is the 12-period EMA minus the 26-period EMA, the signal line is a 9-period EMA of the MACD line, and the histogram is the gap between them.
Explained
The MACD line crossing above the signal line is read as bullish momentum, below as bearish, and being above zero means the short average is above the long one. Like all average-based indicators it lags and gives many signals in sideways markets.
Example
Example with made-up numbersEMA 12 = 105 and EMA 26 = 103, so the MACD line is 2. With a signal line of 1.5, the histogram is 2 − 1.5 = 0.5.
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Related terms
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Open in JoymistaEducational content, not investment advice.