What is the MACD indicator?

MACD stands for Moving Average Convergence Divergence. It is a trend-following momentum indicator developed by Gerald Appel in the late 1970s that shows the relationship between two exponential moving averages (typically the 12-period and 26-period EMAs) of a security's price.

How is MACD calculated?

Three steps: (1) MACD line = 12-period EMA minus 26-period EMA, (2) Signal line = 9-period EMA of the MACD line, (3) Histogram = MACD line minus Signal line. The histogram visualizes the gap between the MACD line and its signal.

What is a MACD crossover?

A bullish crossover happens when the MACD line crosses above the Signal line — often interpreted as a buy signal. A bearish crossover happens when the MACD line crosses below the Signal line — often interpreted as a sell signal.

What is the MACD histogram?

The histogram is the difference between the MACD line and the Signal line, drawn as vertical bars. When the histogram is above zero and rising, bullish momentum is accelerating. When it is below zero and falling, bearish momentum is accelerating.

What are the best MACD settings?

The default and most widely used setting is (12, 26, 9). Day traders sometimes use faster settings such as (5, 35, 5) to react to shorter price swings, while long-term investors may slow it down to (19, 39, 9). Always backtest before relying on non-default settings.

MACD vs RSI — which is better?

They measure different things and work well together. RSI is a bounded oscillator (0–100) best for spotting overbought / oversold conditions. MACD is an unbounded trend-following momentum indicator best for spotting trend changes via crossovers and divergences. Most experienced traders use both.

How many prices do I need to compute MACD?

You need at least 26 + 9 - 1 = 34 closing prices to produce one complete MACD value with Signal line. With fewer prices the Signal line cannot be calculated. More prices produce a more accurate, smoothed result.