What is MACD?
MACD tracks the distance between a faster EMA and a slower EMA. A signal line smooths that difference, while the histogram visualizes the distance between MACD and its signal line.
What does it measure?
Changes in trend momentum based on the relationship between fast and slow exponential averages.
How is it calculated?
Standard MACD = 12-period EMA minus 26-period EMA. A 9-period EMA of the MACD line forms the signal line.
Common interpretation.
- A MACD value above zero means the faster EMA is above the slower EMA.
- A value below zero means the faster EMA is below the slower EMA.
- Histogram expansion describes increasing separation between MACD and its signal line.
- Crossovers summarize momentum changes but do not guarantee continuation.
How traders use it for market context.
- MACD is often more useful for broader context than for very short-term execution.
- It can help compare current intraday momentum with a higher-timeframe trend.