| || What is the definition of MACD? |
MACD stands for “Moving Average Convergence Divergence”. MACD is an oscillator/momentum indicator used in the financial markets to gauge the strength of a trend.
| || TradersLaboratory decodes MACD |
MACD is used to spot price divergences at tops and bottoms. It is composed of two lines (MACCD line and signal line) and a histogram. When the MACD line is above the signal line, the histogram is positive (crosses above 0 into positive territory) and this is a buy signal. When the MACD line crosses below the signal line, the histogram is negative (crosses below 0 and into negative territory) and this is a sell signal. On its own, the MACD does not give reliable signals and it must be combined with other indicators to produce a reliable signal.