What is MACD?
A trend-and-momentum indicator built from the difference of two moving averages.
Formal Definition
Moving Average Convergence Divergence (MACD) subtracts a 26-period exponential moving average from a 12-period one to form the MACD line, then plots a 9-period signal line and a histogram of their difference. Crossovers, zero-line crosses, and divergences generate momentum signals widely used in technical analysis.
In Simple Terms
It is a popular chart tool that tracks when a stock's short-term trend is gaining or losing steam against its longer-term trend. When its lines cross upward, momentum may be turning positive.
Example
When the MACD line crosses above its signal line, traders often read it as a bullish momentum signal.