Definition. An indicator based on the difference between two exponential moving averages, developed by Gerald Appel in the late 1970s.
How it works
In the classic version, MACD is the difference between the 12- and 26-period EMAs, and the signal line is a 9-period EMA of the MACD itself. The histogram shows the difference between them.
Example
A rising MACD above zero means the shorter average is above the longer one and the gap between them is widening.
What to watch out for
MACD is a lagging indicator because it's based on averages. In a trendless market it gives many misleading crossovers.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
