MACD
Trend-following momentum indicator built from the difference between a 12- and 26-period EMA, with a 9-period signal line and histogram.
Formula
MACD line = EMA(12) − EMA(26); Signal = EMA(9) of MACD line; Histogram = MACD line − Signal
MACD (Moving Average Convergence Divergence) subtracts a slower EMA (26) from a faster EMA (12) to produce the MACD line. A 9-period EMA of that line, the signal line, smooths it further. The histogram plots the gap between the two.
The primary signals are: signal-line crossovers (MACD crossing above = bullish), zero-line crossovers (MACD turning positive = trend shift), and divergence between MACD peaks and price peaks. Histogram contraction warns momentum is fading before the crossover appears.
Example
On a daily EUR/USD chart, the MACD line crosses above the signal line while both are still below zero — a bullish crossover from oversold territory. Histogram bars shift from negative to positive, confirming the signal. Traders enter long with a stop below the recent swing low.
Related Terms
Awesome Oscillator
Bill Williams momentum oscillator measuring the difference between 5- and 34-period SMA of midpoints; histogram colour changes signal momentum shifts.
IntermediateElder Ray Index
Measures the power of bulls (high minus EMA) and bears (low minus EMA) relative to an exponential moving average to gauge trend and momentum together.
AdvancedExponential Moving Average (EMA)
Moving average that weights recent closes more heavily via an exponential multiplier, reacting faster to price changes than the SMA.
BeginnerMomentum Indicator
Measures the absolute change in price over n periods; positive and growing values confirm trend strength, declining values warn of exhaustion.
BeginnerPrice Oscillator
Percent difference between two moving averages of price; equivalent to MACD scaled by the longer MA so it is comparable across different-priced assets.
IntermediateRate of Change (ROC)
Percent change between the current close and the close n periods ago; positive values confirm upward momentum, negative values confirm selling pressure.
BeginnerRelative Strength Index (RSI)
Momentum oscillator (0–100) that flags overbought conditions above 70 and oversold below 30 over a default 14-period lookback.
BeginnerSimple Moving Average (SMA)
Arithmetic mean of the last n closing prices — the simplest smoothing tool and anchor for countless other indicators.
BeginnerTRIX
Momentum oscillator showing the percent change in a triple-smoothed EMA; the extra smoothing filters minor fluctuations and cycles below the signal period.
Intermediate