MACD: Momentum from Moving Averages

MACDA momentum indicator built from the gap between two moving averages. (Moving Average Convergence DivergenceA momentum indicator built from the gap between two moving averages.) is a clever hybrid: it uses moving averagesA line that smooths price into its underlying trend. (a trendThe prevailing direction of price: up, down or sideways. tool) to measure momentumBuying recent winners and avoiding recent losers.. It’s built from the *gapA jump between one bar’s close and the next bar’s open.* between a fast and a slow EMAA line that smooths price into its underlying trend. — and that gapA jump between one bar’s close and the next bar’s open. reveals how momentumBuying recent winners and avoiding recent losers. is building or fading.

• MACDA momentum indicator built from the gap between two moving averages. line — the difference between a fast EMAA line that smooths price into its underlying trend. (12) and a slow EMAA line that smooths price into its underlying trend. (26). When it’s above zero, the fast average is above the slow (bullish); below zero, bearish.
• Signal line — a 9-period EMAA line that smooths price into its underlying trend. *of the MACDA momentum indicator built from the gap between two moving averages. line*; crossovers between MACDA momentum indicator built from the gap between two moving averages. and signal are the classic trade triggers.
• Histogram — bars showing the gapA jump between one bar’s close and the next bar’s open. between the MACDA momentum indicator built from the gap between two moving averages. and signal lines. It’s the early-warning gauge: shrinking bars mean momentumBuying recent winners and avoiding recent losers. is fading even before a crossover.