Moving Average Convergence Divergence
Oscillators, MACD
- What it shows
Two lines and a histogram that show the gap between a fast and a slow average and how it is changing.
- How it is built
The MACD line is the fast EMA minus the slow EMA. The signal line is an EMA of the MACD line, and the histogram is the gap between them.
Default: Fast 12, slow 26, signal 9.
- How traders read it
- MACD above its signal line favours buyers, below it sellers.
- A cross of the zero line shows the two averages swapping places.
- A shrinking histogram shows momentum fading.
- History
Developed by Gerald Appel in the late 1970s. The histogram was added later by Thomas Aspray in 1986.
Gerald Appel, late 1970s