Moving Average Convergence Divergence (MACD)
Moving Average Convergence Divergence (MACD) is a technical analysis indicator used to identify momentum in a stock or other security. It is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The result is then plotted against a 9-day EMA of the MACD line, which is called the signal line. When the MACD line crosses above the signal line, it is a bullish signal, indicating that the security is likely to experience upward momentum. Conversely, when the MACD line crosses below the signal line, it is a bearish signal, indicating that the security is likely to experience downward momentum.
History of MACD
MACD was developed by Gerald Appel in the late 1970s. Appel was a technical analyst who believed that the stock market was driven by investor sentiment and that technical analysis could be used to identify trends in the market. He developed the MACD indicator to identify momentum in the market and to help traders make better decisions about when to buy and sell stocks. Since its introduction, MACD has become one of the most widely used technical indicators in the world.
Comparison Table
| Indicator | 12-day EMA | 26-day EMA | 9-day EMA of MACD Line |
|---|---|---|---|
| MACD | 12-day EMA | 26-day EMA | 9-day EMA of MACD Line |
Summary
Moving Average Convergence Divergence (MACD) is a technical analysis indicator used to identify momentum in a stock or other security. It is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The result is then plotted against a 9-day EMA of the MACD line, which is called the signal line. When the MACD line crosses above the signal line, it is a bullish signal, indicating that the security is likely to experience upward momentum. Conversely, when the MACD line crosses below the signal line, it is a bearish signal, indicating that the security is likely to experience downward momentum. For more information about MACD, you can visit Investopedia, The Balance, and Investing.com.
See Also
- Exponential Moving Average (EMA)
- Relative Strength Index (RSI)
- Bollinger Bands
- Stochastic Oscillator
- On Balance Volume (OBV)
- Average Directional Index (ADX)
- Parabolic SAR
- Fibonacci Retracement
- Price Channel
- Price Volume Trend (PVT)
