Moving Average Convergence Divergence (MACD)

Moving Average Convergence Divergence (MACD) trading signal is a technical analysis tool used to identify changes in momentum, direction, and trend in financial markets. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA, and then plotting a 9-day EMA as a signal line.

The MACD trading signal is generated when the MACD line crosses above or below the signal line. When the MACD line crosses above the signal line, it is considered a bullish signal, indicating that momentum is increasing and the asset may experience an upward trend. Conversely, when the MACD line crosses below the signal line, it is considered a bearish signal, indicating that momentum is decreasing and the asset may experience a downward trend.

Traders may also look for divergences between the MACD and the price of the asset. A bullish divergence occurs when the MACD is making higher lows while the price is making lower lows, indicating a potential reversal. A bearish divergence occurs when the MACD is making lower highs while the price is making higher highs, indicating a potential reversal.

MACD trading signals are used in conjunction with other technical indicators to confirm potential buy or sell opportunities.