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ViewsMoving Average Convergence DivergenceFrom Traderpedia
Developed by Gerald Appel, MACD (moving average convergence divergence) is a trend following momentum indicator that shows the relationship between two moving averages of prices. [edit] CalculationTo calculate the MACD subtract the 26day exponential moving average (EMA) from a 12day EMA. A 9day dotted EMA of the MACD called the signal line is then plotted on top of the MACD. Other lengths of average can be used, but 91226 is the most common "standard" setting. [edit] FunctionMACD measures the difference between two moving averages. A positive MACD indicates that the 12day EMA is trading above the 26day EMA. A negative MACD indicates that the 12day EMA is trading below the 26day EMA. If MACD is positive and rising, then the gap between the 12day EMA and the 26day EMA is widening. This indicates that the rateofchange of the faster moving average is higher than the rateofchange for the slower moving average. Positive momentum is increasing and this would be considered bullish. If MACD is negative and declining further, then the negative gap between the faster moving average and the slower moving average is expanding. Downward momentum is accelerating and this would be considered bearish. [edit] ApplicationThere are 3 common methods to interpret the MACD1:
