MACD
The gap between a fast and a slow exponential average, its signal line and histogram.
Formula
MACD = EMA(12) − EMA(26) Signal = EMA(9) of MACD Histogram = MACD − Signal
How to read it
Above zero the fast average leads; MACD crossing its signal line is the common trigger. A histogram shrinking toward zero shows momentum fading.
How to use it
Trend and momentum in one pane; divergence between price and MACD often precedes turns.
Limitations
Lags, and its level is in price units, so it cannot be compared across stocks.
In Kereon
Charts · Superchart. Defaults 12, 26 and 9 on the close; zero line drawn.
Also called: moving average convergence divergence, convergence, divergence.