Technical Analysis, Signals, Trading Systemsīy measuring the difference between two Exponential Moving Averages (EMAs), MACD can be positive or negative.
The art of technical analysis is to find setting that would satisfy you need. Controversially, MACD's bar period setting could be increase to make MACD line smoother which will increase the lag. The lag could be reduced by selecting smaller MACD's bar period setting, yet MACD line will become choppier. You have to understand that MACD is lagging indicator and the lag depends on the bar period setting. On the Nasdaq 100 chart below you may see an example of MACD.Ĭhart 1: MACD (Moving Average Convergence/Divergence) The MACD histogram makes centerline crossovers and divergences more easily identifiable. Conversely, if the value of MACD is less than its EMA signal, then the value on the MACD-Histogram will be negative. If the value of MACD is larger than the value of its EMA signal, then the value on the MACD-Histogram will be positive. The MACD-Histogram represents the difference between the MACD and its signals line (EMA). On index and stock charts, MACD consists of three lines - MACD itself, exponential moving average applied to MACD and used as a signal line and MACD Histogram. MACD is an oscillator and is plotted as a line that moves above and below zero line (center line). Different moving averages (simple, exponential, weighted and etc.) could be used as well. However, the MACD setting may greatly differ from a stock to stock and from a timeframe to a timeframe. The historically popular is the difference between a security's 26-day and 12-day Exponential Moving Averages (EMAs). It is calculated as a difference between the fast and slow moving averages. It was first implemented by Gerald Appel in 1970s and later in 1986 MACD Histogram was added to MACD by Thomas Aspray.
In technical analysis the MACD (Moving Average Convergence/Divergence) is a indicator that shows the relationship between two moving averages.