Moving Average Convergence Divergence - MACD

Moving Average Convergence Divergence - MACD
A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.


Moving Average Convergence Divergence (MACD)

There are three common methods used to interpret the MACD:

1. Crossovers - As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting "faked out" or entering into a position too early, as shown by the first arrow.

2. Divergence - When the security price diverges from the MACD. It signals the end of the current trend.

3. Dramatic rise - When the MACD rises dramatically - that is, the shorter moving average pulls away from the longer-term moving average - it is a signal that the security is overbought and will soon return to normal levels.

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart above, the zero line often acts as an area of support and resistance for the indicator.


Investment dictionary. . 2012.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • Moving Average Convergence/Divergence —    ► See MACD …   Financial and business terms

  • Moving average — For other uses, see Moving average (disambiguation). In statistics, a moving average, also called rolling average, rolling mean or running average, is a type of finite impulse response filter used to analyze a set of data points by creating a… …   Wikipedia

  • Exponential Moving Average - EMA — A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as exponentially weighted moving average . This type of moving average reacts… …   Investment dictionary

  • MACD — MACD, which stands for Moving Average Convergence / Divergence, is a technical analysis indicator created by Gerald Appel in the 1960s. It shows the difference between a fast and slow exponential moving average (EMA) of closing prices. During the …   Wikipedia

  • Macd — La MACD (sigle anglais signifiant Moving Average Convergence Divergence, ou convergence et divergence des moyennes mobiles) est un indicateur boursier qui participe de l analyse technique en ce sens qu il consiste en l’étude des graphiques de… …   Wikipédia en Français

  • MACD —    Moving Average Convergence/Divergence. This technical analysis tool shows the relationship between two exponential moving averages of a share price for different periods. The two exponential moving averages are plotted on a chart, producing… …   Financial and business terms

  • MACD — La MACD (sigle anglais signifiant Moving Average Convergence Divergence, ou convergence et divergence des moyennes mobiles) est un indicateur boursier qui participe de l analyse technique en ce sens qu il consiste en l’étude des graphiques de… …   Wikipédia en Français

  • MACD — Der MACD (Moving Average Convergence/Divergence) Indikator (zu Deutsch: Indikator für das Zusammen /Auseinanderlaufen des gleitenden Durchschnitts) ist als Trendfolger ein Instrument der Markttechnik. Der Indikator wurde 1979 von Gerald Appel… …   Deutsch Wikipedia

  • MACD — Este artículo o sección necesita referencias que aparezcan en una publicación acreditada, como revistas especializadas, monografías, prensa diaria o páginas de Internet fidedignas. Puedes añadirlas así o avisar al autor principa …   Wikipedia Español

  • Индикатор MACD — График MACD с параметрами 12, 26, 9. Индикатор MACD (англ. Moving Average Convergence/Divergence  схождение/расхождение скользящих средних)  технический индикатор, разработанный Джеральдом Аппелем ( …   Википедия

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”