MACD
What it shows
MACD (Moving Average Convergence Divergence) shows trend momentum via the difference between two moving averages plus a histogram. It tells whether an uptrend is strengthening or fading.
How to read it
Watch line crossovers and the histogram changing sign: these mark momentum turns. Divergence (price rising while MACD weakens) has historically warned of an exhausting move.
Parameters
- MACD vs Signal line + histogram
- MACD above the signal line with a positive histogram means rising momentum; the reverse means fading momentum.
- Positive reading: MACD above signal, histogram positive and rising: historically bullish momentum.
- Negative reading: MACD below signal, histogram negative: historically bearish momentum.
- Neutral reading: Lines intertwined, histogram near zero; no clear momentum direction.
Example
The MACD line crosses the signal from below and the histogram turns positive and rising: historically a picture of building bullish momentum. When MACD falls below the signal and the histogram turns negative, momentum historically weakened; lines intertwined near zero mean no clear direction.