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MACD

Moving Average Convergence Divergence: the difference between a 12-period and a 26-period EMA, plus a 9-period EMA of that difference (the signal line). Traders read crossovers of the MACD line and signal line, or of the MACD line and zero, as momentum shifts. Its skeleton — the 12/26 EMA relationship — can be traded directly as a long/flat switch.
See it in action: EMA 12/26 Trend →

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Related terms

EMA (Exponential Moving Average)A moving average that weights recent prices more heavily, using an exp…MomentumThe empirical tendency of assets that have recently performed well to …

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