MACD (Moving Average Convergence/Divergence) - Everything You Need to Know

MACD stands for Moving Average Convergence/Divergence.

MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price.

The MACD is typically calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA.

A 9-day EMA of the MACD is then plotted as a signal line.

Traders use MACD to identify trend changes in a security's price.

When the MACD line crosses above the signal line, it's considered a bullish signal.

When the MACD line crosses below the signal line, it's considered a bearish signal.

Traders also look for divergences between MACD and the security's price to identify potential trend reversals.

Traders use MACD to identify potential buy and sell signals.

When the MACD line crosses above the signal line, traders might consider buying the security.

When the MACD line crosses below the signal line, traders might consider selling the security.

Traders also use MACD to confirm trend changes identified by other technical indicators.

MACD is just one of many technical indicators used by traders.

Other popular indicators include moving averages, Relative Strength Index (RSI), and Bollinger Bands.

Traders might use a combination of these indicators to identify potential buy and sell signals.

MACD is a popular trading indicator used by traders around the world to identify potential buy and sell signals and confirm trend changes.

Traders should use MACD in combination with other technical indicators and their own analysis to make informed trading decisions.