MACD (Moving Average Convergence Divergence) is a popular technical indicator used in stock trading to identify trends and momentum. It is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The result is then plotted as a histogram on a chart and a 9-period EMA (also known as the signal line) is added to the chart to reduce false signals.
The MACD indicator is used to identify changes in momentum, trends, and reversals. When the MACD line crosses above the signal line, this is considered a bullish signal, indicating that the trend is likely to continue upward. Conversely, when the MACD line crosses below the signal line, this is considered a bearish signal, indicating that the trend is likely to continue downward.
The formula for calculating MACD is:
MACD = 12-period EMA - 26-period EMA
Signal line = 9-period EMA of MACD
Histogram = MACD - Signal line
where EMA stands for Exponential Moving Average.
MACD
Technical Indicator
MACD (Moving Average Convergence Divergence) is a popular technical indicator used in stock trading to identify trends and momentum. It is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The result is then plotted as a histogram on a chart and a 9-period EMA (also known as the signal line) is added to the chart to reduce false signals.
The MACD indicator is used to identify changes in momentum, trends, and reversals. When the MACD line crosses above the signal line, this is considered a bullish signal, indicating that the trend is likely to continue upward. Conversely, when the MACD line crosses below the signal line, this is considered a bearish signal, indicating that the trend is likely to continue downward.