MACD
The gap between two EMAs plus a signal line; line crosses flag momentum shifts, the histogram its speed.
How to read it
MACD is the gap between a fast and a slow EMA of price. The MACD line vs. its signal line (an EMA of the MACD line) shows momentum; the histogram is the distance between them. Above the zero line is a bullish regime, below is bearish.
Trading signals
The classic long signal is the MACD line crossing above the signal line (the histogram flips positive), most reliable when it happens below zero. The mirror cross down is a short/exit. A cross of the zero line itself confirms a broader momentum shift.
Divergence
Like RSI, MACD can diverge from price: price makes a higher high while MACD makes a lower high — the up-move is losing thrust, a warning of a stall or reversal (and the mirror for downtrends).
Parameters
Fast and Slow lengths set the two EMAs (classic 12 / 26); Signal length smooths the MACD line (classic 9). Shorter values react sooner but produce more false crosses.
- MACD Fast Length
- Bars in the fast EMA.
- MACD Slow Length
- Bars in the slow EMA.
- MACD Signal Length
- Bars in the signal-line EMA.