MACD is a trend-following momentum indicator that shows the relationship between two moving averages to highlight shifts in momentum.
MACD stands for Moving Average Convergence Divergence. It is a trend-following momentum indicator that reveals changes in the strength and direction of a price trend.
MACD is built from two exponential moving averages, typically the 12-period and 26-period. The MACD line is the difference between them, and a 9-period signal line is plotted on top of it.
When the MACD line crosses above the signal line, it is often read as bullish momentum; a cross below is read as bearish. The histogram shows the gap between the two lines, making momentum shifts easier to see.
Like all indicators, MACD lags price because it is based on averages. Traders combine it with other tools to avoid false signals during choppy, sideways markets.
After a downtrend, an asset starts recovering and its 12-period EMA rises above the 26-period EMA, lifting the MACD line above the signal line — a bullish crossover. The histogram flips from negative to positive, confirming momentum is shifting upward, which some traders treat as an early trend signal.
A crossover happens when the MACD line moves above or below the signal line. A move above is generally read as bullish momentum, while a move below is read as bearish, though both can produce false signals in sideways markets.
MACD is a trend-following indicator built from moving averages that highlights the direction and strength of momentum. RSI is an oscillator that measures whether an asset is overbought or oversold on a 0 to 100 scale. Many traders use them together.
WalletLens is a free, private net-worth tracker that puts concepts like this into practice — it tracks your crypto, stocks, gold and cash in one dashboard, computing cost basis, P&L and allocation automatically with live prices. No account, and your data stays on your device.
Free net worth tracker · Blog · About · Home