What is the MACD Indicator?
The MACDI is a two-component indicator based on two exponential moving price averages. Because of the early signals which can be derived from this indicator, it is regarded by many analysts as helpful in the trading of stock options. The first component of the MACDI is a line which represents the difference between two moving averages, each computed for a different period of time. This first component is called the Price Phase Line. The second component, which is called the Signal Line, is an exponential average of the first component. The two lines are charted together on the same time scale. The Price Phase Line is the upper line during upward price movements and the lower line during downward movements. The Signal Line, being an average of the Price Phase Line, is the lower line during upward moves and the upper line during downward moves. As a general rule, it is considered bullish when the Price Phase Line is rising and is above the Signal Line. Conversely, it is bearish when the
