MACD (Moving Average Convergence Divergence)
An indicator that reads the direction and strength of a price trend from the gap between short- and long-term moving averages.
In plain terms
It looks at the distance between the price's short flow (12-day average) and long flow (26-day average). When the short flow widens above the long, momentum leans up; when it widens below, momentum leans down.
The "exponential moving average" used here weights recent prices more. So it responds a bit faster to recent changes in flow.
What it tells you
It looks at whether the price is rising or falling now, and whether that strength is building or fading. It aims to read the "direction and momentum" of the trend together.
When the MACD line breaks above the signal line, it is often read as an up signal (commonly a golden cross); breaking below, a down signal (death cross).
Formula
MACD line = 12-day exponential moving average − 26-day exponential moving average signal line = 9-day EMA of the MACD line histogram = MACD line − signal line
What high or low means
When the MACD line is above the signal line and the histogram (their gap) grows, upward strength is seen as building.
Conversely, below the signal line with the histogram growing negative, downward strength is seen as building.
MACD uses averages of past prices, so signals come a beat late (a lagging indicator). It often tells you after a big move has already started.
In a sideways market that swings up and down without direction, signals keep misfiring (whipsaws) and can confuse you instead.
Like RSI and moving averages, it looks only at price action, not company value. It is best seen as a tool describing trend state, not a buy/sell suggestion.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see MACD and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.