Moving Average Convergence Divergence

The Moving Average Convergence Divergence (MACD) indicator is a lower study which contains 2 moving average lines. The first line is a signal line and the second line is a MACD line. The difference between the lines is the moving average time period. The MACD line is the difference in two lines. The signal or trigger line is a periodic exponential moving average of that difference. The usual settings are 12 for fast, 26 for slow, and 9 for MACD. An 8/17/9 combination is also frequent.

Moving Average Convergence Divergence is the vertical distance the 2 exponential moving average curves. Zero line is where it intersects. The trade strategy associated with MACD is fairly simple. A buy alert occurs when the MACD line crosses above the trigger or signal line. A sell occurs if MACD line crosses below the trigger or signal line. A divergence in peaks/troughs of price data and peaks/troughs of Moving Average Convergence Divergence data indicates a potential divergence.

Only taking alerts aligned with the trend helps you earn returns and filter bad signals. Only use buy signals when in uptrends, and only use sell signals when in downtrends. Always ignore counter trend signals.