What It Is
MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator that shows the relationship between two exponential moving averages. Created by Gerald Appel in the 1970s, it remains one of the most widely used indicators in technical analysis.
The name describes exactly what it does: it tracks whether moving averages are converging (coming together) or diverging (moving apart). When the faster EMA pulls away from the slower EMA, momentum is increasing. When they come together, momentum is fading.
Key insight: MACD is a lagging indicator - it tells you what has happened, not what will happen. It excels in trending markets but produces many false signals in ranging, choppy conditions. Use it to confirm trends, not predict them.
MACD histogram is your early warning system. When the histogram starts shrinking while price still trends, momentum is fading. Don't wait for the crossover — the histogram shift gives you a head start.
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Compare this reference with related structures and readings before applying it to a live chart.