MACD (Moving Average Convergence Divergence), developed by Gerald Appel in 1979, is one of the most widely used trend-momentum indicators worldwide. It simultaneously reflects trend direction, momentum strength, and potential reversal signals.
MACD above zero = short-term MA above long-term MA = bullish bias. Below zero = bearish bias.
MACD line crossing above signal line = golden cross (buy); crossing below = death cross (sell). Crosses near the zero line carry more significance.
Expanding histogram (toward positive) = increasing bullish momentum. Shrinking = weakening momentum. Histogram turning from negative to positive is a key bullish signal.
Price makes new high but MACD doesn't (bearish divergence = potential top). Price makes new low but MACD doesn't (bullish divergence = potential bottom).
Not necessarily. Shrinking only means weakening momentum. Wait for a death cross or clear divergence before exiting.
Yes, but beginners should stick with standard (12,26,9). Custom parameters may diverge from consensus, reducing effectiveness.
It's a weaker signal. Wait for MACD to return above zero to confirm a proper bullish setup.