MACD - Definition

MACD or Moving Average Convergence Divergence is a Technical Analysis indicator created by Gerald Appel in the late 1970s. It is a mathematical indicator used by some financial traders to predict future price movements of stocks, commodities and other financial instruments. The period for the moving averages on which an MACD is based can vary, but the most commonly used parameters involve a faster EMA of 12 days, a slower EMA of 26 days, and the signal line as a 9 day EMA of the difference between the two. It is written in the form, MACD (faster, slower, and signal)

MACD attempts to measure both price Trend and Momentum, where momentum can be thought of as the strength of the trend. If MACD is greater than zero, it means the short-term average is higher than the Long-term average, suggesting the financial instrument is trending upwards. Similarly, if MACD is less than zero it suggests the instrument is trending downwards. The steeper the slope of the MACD plot, the more violently the price is moving and, therefore, the stronger the momentum.



Terms near "MACD"

MACD Histogram
Macedonia Denar
Macro risk
Macro-based
Macro-hedge
Macroeconomics
MACRS
MAD
Maggie Mae (MGIC)
Mail-order catalogue
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