MACD
Two EMAs and their gap: trend direction, momentum, and their turning points in one pane.
Core IndicatorsIntermediate 6 min read· Lesson 8 of 13 in Technical Analysis
Explanation & formula
MACD line = EMA(12) − EMA(26). Signal = EMA(9) of the MACD line. Histogram = MACD − Signal. It's unbounded (unlike RSI) — an oscillator drawn in price units, which is why this platform plots it in its own pane below price.
Interpretation
MACD above zero: 12EMA above 26EMA — bullish regime. MACD crossing above Signal: momentum turning up (strongest when it happens below zero in an uptrend pullback). Histogram shrinking: the current swing is decelerating — an early, twitchy warning.
Bullish / bearish signals
Bullish: signal-line cross up, zero-line reclaim, bullish divergence at lows. Bearish: the mirrors. All are scannable: MACD_BULL_CROSS / MACD_BEAR_CROSS, or raw MACD.macd cross_above MACD.signal.
Common mistakes
Trading every signal cross in a sideways chop — MACD whipsaws exactly when trend is absent. Filter with trend (price vs 200MA) or trend-strength (ADX) first.