MACD (Moving Average Convergence Divergence) shows momentum by comparing two EMAs.
- MACD line: 12 EMA minus 26 EMA.
- Signal line: 9-period EMA of the MACD line.
- Histogram: the gap between them.
Reading it
- MACD crosses above the signal line: bullish momentum.
- MACD crosses below: bearish momentum.
- Above zero: the short-term average is above the long-term one (uptrend bias).
- A shrinking histogram: momentum is fading.
Wick says
MACD is basically a moving average crossover with a speedometer attached. The histogram shows how hard the engine is pushing.
Pro tip
MACD is great for spotting divergence (Advanced level): price makes a new high, MACD doesn't.
Key takeaways
- Default settings: 12, 26, 9.
- Crossovers show momentum shifts; zero line shows bias.
- It lags, so use it to confirm, not to predict.