MACD
A momentum indicator showing the relationship between two moving averages, with a signal line and a histogram to spot turns and trend strength.
The MACD (Moving Average Convergence Divergence) is a momentum indicator that measures the relationship between two exponential moving averages of price. It is one of the most popular indicators precisely because it combines trend and the strength of the move in a single panel.
It has three components. The MACD line is the difference between a fast EMA (12 periods) and a slow one (26). The signal line is a 9-period EMA of the MACD line itself. And the histogram shows the distance between the two, making it visible when momentum is accelerating or losing strength.
There are three classic uses. Crossovers: when the MACD line crosses the signal line upward, it is a bullish bias; downward, bearish. Zero line: MACD above zero points to an upward bias; below it, downward. And divergences: when price makes a new high but the MACD does not follow, the trend may be weakening.
Because it derives from moving averages, the MACD also has lag and produces false signals in markets without direction. It performs best on assets with a clear trend, such as crypto pairs during strong moves, and always confirmed by context.