An indicator that uses the difference between a short and a long exponential moving average to show the direction of a trend and changes in its strength.
Chart data
Step 10 of 12
What you will learn
Learn with charts how the MACD line, signal line and histogram are calculated and what to watch out for.
MACD examples — lower paneSample data · not a real stock
What to look forAs the trend turns from down to up, follow the order: the histogram goes from negative to positive, then the MACD line moves above zero.
CautionMACD goes through moving averages twice, so it reacts late.
1260 bars · 2018-11-12 – 2023-09-08
On price
Lower panes
Auto
Sample (synthetic) data: not a real stock or real prices, but prices generated to explain the idea. Drag the chart to move through time and use the wheel or two fingers to zoom.
Concept
MACD (Moving Average Convergence Divergence), devised by Gerald Appel, measures — as its name says — how two moving averages come together (converge) and move apart (diverge). Three things are drawn together in the lower pane.
MACD line (blue): 12-day EMA − 26-day EMA. Above 0 means the short-term average is above the long-term one.
Signal line (orange): a 9-day EMA of the MACD line — a smoother version of it.
Histogram (bars): MACD line − signal line. It shows whether the gap between the two lines is widening or narrowing.
The MACD line only appears once the 26-day EMA exists, and the signal line 9 days after that (no values for the first 33 days).
MACD values are in price units (won), so do not compare their size directly between stocks with different prices.
Cautions when reading it
A moving average of moving averages: MACD passes through moving averages twice, so it reacts late. By the time you see a cross, the price may already have moved a lot.
Frequent crosses in sideways markets: in directionless stretches the MACD and signal lines cross often. Find such stretches on the chart.
Crossing zero: MACD above 0 only means the 12-day EMA is above the 26-day EMA; by itself it does not tell you future prices.
The periods: 12, 26 and 9 are conventional values. Change them and the signal timing changes.
Chart shapes and indicators summarize past prices. The same shape is sometimes right and sometimes wrong depending on the market, and this page does not tell you when to buy or sell any stock. To practice yourself, try the chart lab or mock trading.