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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Moving Average Convergence Divergence. A technical indicator that shows the relationship between two moving averages of a stock price.
Why It Matters
MACD is one of the most popular technical indicators, used by both beginners and professionals. It helps identify trend direction, momentum, and potential reversal points. When the MACD line crosses above the signal line, it's considered bullish; when it crosses below, bearish. Many traders use it alongside RSI for confirmation.
Key Points
- MACD Line = 12-period EMA minus 26-period EMA; Signal Line = 9-period EMA of the MACD Line
- A MACD crossover (MACD crossing above signal) is a common buy signal; crossing below is a sell signal
- The MACD histogram shows the distance between MACD and signal lines — growing bars mean strengthening momentum
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Common Questions
Moving Average Convergence Divergence. A technical indicator that shows the relationship between two moving averages of a stock price. MACD is one of the most popular technical indicators, used by both beginners and professionals. It helps identify trend direction, momentum, and potential reversal points.
MACD is one of the most popular technical indicators, used by both beginners and professionals. It helps identify trend direction, momentum, and potential reversal points. When the MACD line crosses above the signal line, it's considered bullish; when it crosses below, bearish. Many traders use it alongside RSI for confirmation.
MACD Line = 12-period EMA minus 26-period EMA; Signal Line = 9-period EMA of the MACD Line
A MACD crossover (MACD crossing above signal) is a common buy signal; crossing below is a sell signal
The MACD histogram shows the distance between MACD and signal lines — growing bars mean strengthening momentum