Moving average convergence divergence (MACD) is a financial market indicator that can discover opportunities. Because understanding how to use the instrument is critical to a trader's performance, we've looked at three common MACD techniques. What is MACD? MACD, or the moving average convergence divergence, is a trend following and momentum indicator that calculates the difference in two moving averages of prices. It can be used to determine the direction of a trend. MACD is calculated by subtracting the 26-day exponential moving average from the 12-day exponential moving average and dividing it by a 9-day exponential moving average of its difference. The MACD line can be used to identify trends as well as divergences that may signal a trading opportunity. A bullish divergence occurs when prices rally but the MACD makes lower highs and higher lows, signaling that buyers are stepping in at lower prices than sellers are willing to sell at. . Conversely, a beari...
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