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MACD (Moving Average Convergence Divergence)

The MACD measures the distance between a fast EMA (12) and a slow one (26): a widening gap means the move is accelerating, a closing gap means it is slowing. The signal line and histogram derive from it.

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The MACD, introduced by Gerald Appel in the 1970s, starts from a simple observation: two moving averages of different periods spread apart when the move accelerates and drift back together when it slows. Instead of eyeballing the two averages, the MACD plots their distance directly — and turns it into a measurement.

In plain terms — Two cars on the same road: one reacts instantly to traffic, the other keeps the average pace. If the first keeps pulling away, the flow is accelerating; if the second catches up, the acceleration is over. The MACD is the rangefinder between the two.

How it is built

Three elements, all derived from closes:

Element Formula What it says
MACD line EMA 12 − EMA 26 Distance between short- and medium-term momentum
Signal EMA 9 of the MACD line The average of that distance: the reference
Histogram MACD − signal How fast the gap is widening or closing

Two properties to fix in mind right away. Zero is a regime boundary: MACD above zero means EMA 12 above EMA 26 — a bullish average structure; below zero, bearish. The histogram leads the line: its bars shorten before the crossover happens, because they measure the speed at which the two lines are converging.

How to read the chart — Top: price with EMA 12 (gold) and EMA 26 (teal). Bottom: MACD line (blue), dashed signal (gold), green/red histogram around zero. Interactive — the highlighted points show the confirmed bullish cross, the stretch below zero and the histogram deflating before the turn.

INDICATOR · MOMENTUM MACD — the distance between two averages Line = EMA 12 − EMA 26 · signal = EMA 9 of the line · histogram = the gap CYCLEPEDIA DIAGRAM — EMICICLO PRICE · EMA 12 · EMA 26 94 100 105 EMA 12 EMA 26 MACD (12, 26, 9) 0 1.9 MACD signal (EMA 9) histogram cross BARS ABOVE ZERO 39 of 43 SIGNAL CROSSES 3 MACD measures acceleration, not guaranteed direction
The MACD line is the distance between the two EMAs in the upper panel; the histogram is the distance between MACD and signal.
Hover or tap the highlighted points

Reading it in practice

  1. Position relative to zero — the most robust reading and the one beginners use least: above zero you look for bullish confirmations, below zero for defence. Changing sides of zero matters more than any crossover.
  2. MACD/signal crossover — the distance overtakes its own average: short-term momentum accelerates against the medium term. Read it in the context of the price panel: a bullish cross below zero and against the trend is worth little; the same cross above zero, with the trend, is worth more.
  3. A deflating histogram — ever-shorter bars while price keeps going the same way: thrust is running out. Often the first warning, ahead of the crossover and ahead of any visible turn in price.
  4. Divergences — rising price highs with falling MACD highs: same logic and same cautions as RSI divergences — a warning to verify on price, not a timer.

Limits and traps

Warning — The MACD is built from averages: it inherits their lag and their fragility in the absence of a trend. In a sideways market crossovers fire back and forth around zero; the "is there a trend?" filter (ADX) comes before any MACD signal.

  • The line's absolute value depends on the instrument's price: it cannot be compared across assets (the normalised variant, PPO, exists for that).
  • The 12-26-9 parameters were born on daily charts; on other timeframes they remain a sensible starting point, not a truth.
  • ema — the building block
  • rsi — the other strength gauge, on a fixed 0–100 scale
  • adx — the filter that decides whether MACD signals make sense
  • trend · indicatori
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