MACD (Moving Average Convergence Divergence)

MACD is a trend-following momentum indicator that shows the relationship between two exponential moving averages of a security's price. It consists of the MACD line (12-period EMA minus 26-period EMA), a signal line (9-period EMA of the MACD line), and a histogram representing the difference between the two.

How MACD Is Used in Trading

The most common MACD signal is the crossover. When the MACD line crosses above the signal line, it generates a bullish signal; crossing below generates a bearish signal. Traders use these crossovers for entry and exit timing in both trending and range-bound markets.

The MACD histogram provides additional insight. Growing histogram bars indicate strengthening momentum in the current direction, while shrinking bars suggest the move is losing steam. A histogram crossing zero confirms the crossover signal.

MACD divergence, where price and MACD move in opposite directions, is considered one of the strongest reversal signals in technical analysis. Combining MACD with RSI or ADX helps filter false signals and improve trade accuracy.

Access via API

Get all three MACD components with a single call:

Returns the MACD main line, signal line, and histogram values.