What is Moving Average Convergence Divergence (MACD)?
A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A 9-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger of buy and sell signals. Crossovers – When the MACD falls below the signal line it is a bearish signal, and indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, and indicates that it may be time to buy.
