GlossaryIntermediate
MACD (Moving Average Convergence Divergence)
A trend-following momentum indicator built from the difference between two EMAs, plus a signal line and histogram derived from that difference.
MACD, developed by Gerald Appel, is calculated as the difference between a shorter and a longer EMA (commonly 12-period and 26-period), producing the "MACD line." A further EMA of that line (commonly 9-period) forms the "signal line," and the gap between the two is commonly plotted as a histogram.
A MACD line crossing above or below its signal line is a commonly watched momentum-shift signal, and the histogram's expansion or contraction reflects whether that momentum is accelerating or fading. See Kaavon's dedicated MACD article for the full construction and common signal patterns.
Examples
- A MACD line crossing above its signal line is a commonly watched bullish momentum signal, and crossing below is a commonly watched bearish one.
- MACD is built directly from two EMAs, making it a lagging indicator by construction, since EMAs themselves are calculated from past price.