Moving Average Convergence Divergence (MACD)
In technical analysis, MACD stands for Moving Average Convergence Divergence. It is a widely used indicator that helps traders and analysts identify changes in momentum, trend strength, and potential trend reversals in a financial instrument’s price movement. The MACD indicator is composed of three main components: MACD Line (Moving Average Convergence Divergence Line): The MACD line is the difference between two exponential moving averages (EMAs) calculated over different time periods. The most common settings are the 12-period EMA minus the 26-period EMA. The resulting MACD line represents the short-term momentum of the price movement. Signal Line: The signal line is a smoothed moving average of the MACD line itself. It is typically a 9-period EMA of the MACD line. The signal line helps to identify potential changes in the direction of the trend. Histogram: The histogram is the vertical bars that represent the difference between the MACD line and the signal line. When the MACD line crosses above the signal line, the histogram bars are positive; when the MACD line crosses below the signal line, the bars are negative. The height of the histogram bars reflects the strength of the momentum.
Related Terms
- Equities
- Volume
- Uptrend
- Support
- Risk-Reward Ratio
- Reversal
- Retracement
- Resistance
- Relative Strength Index (RSI)
- Price Action
- Position Sizing
- Overbought
- Oversold
- On Balance Volume (OBV)
- Trendline
- Equities
- Volume
- Uptrend
- Support
- Risk-Reward Ratio
- Reversal
- Retracement
- Resistance
- Relative Strength Index (RSI)
- Price Action
- Position Sizing
- Overbought
- Oversold
- On Balance Volume (OBV)
- Trendline
- Mean Reversion
- Moving Average (MA)
- Inverse Heads & Shoulders
- Heads & Shoulders
- Flag
- Drawdown
- Downtrend
- Double Top
- Double Bottom
- Distribution
- Descending Triangle
- Cup & Handle
- Consolidation
- Candlestick
- Breakout
- Breakdown
- Bollinger Bands
- Bearish Divergence
- Bullish Divergence
- Backtesting
- Ascending Triangle
- Accumulation
Most Popular Terms
Other Terms
- Options expiry
- Adjusted distributed income
- International securities exchanges
- Settlement currency
- Federal funds rate
- Active Tranche
- Convertible Securities
- Synthetic ETF
- Physical ETF
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- Buyback
- Secondary Sharing
- Bookrunner
- Notional amount
- Negative convexity
- Jumbo pools
- Inverse floater
- Forward Swap
- Underwriting risk
- Reinvestment risk
- Final Maturity Date
- Payment Date
- Secondary Market
- Margin Requirement
- Mark-to-market
- Pledged Asset
- Yield Pickup
- Subordinated Debt
- Trailing Stops
- Treasury Stock Method
- Stochastic Oscillator
- Bullet Bonds
- Basket Trade
- Contrarian Strategy
- Exchange Control
- Notional Value
- Relevant Cost
- Dow Theory
- Speculation
- Stub
- Trading Volume
- Going Long
- Pink sheet stocks
- Rand cost averaging
- Sustainable investment
- Stop-limit sell order
- Economic Bubble
- Ask Price
- Constant prepayment rate
- Covenants
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