MACD

Understand the MACD line, its signal line, and what the app infers about momentum from them.

The essentials

The MACD (Moving Average Convergence Divergence) is a momentum indicator built from two exponential moving averages. The MACD line measures the gap between a short EMA and a long EMA, and a second line, called the signal line, is a moving average of that MACD line.

What matters day to day is the relative position of the two lines. When the MACD line is above its signal line, recent momentum leans bullish. When it is below, momentum leans bearish.

MACD line above the signal line: bullish momentum.
MACD line below the signal line: bearish momentum.
The larger the gap between the two lines, the stronger the momentum in that direction.

In the app, the MACD confluence signal is bullish when the MACD line is above its signal line, and bearish when it is below.

This signal describes momentum, not a price prediction. It is not a buy or sell instruction: it is educational content meant to be combined with your own analysis.

Going further: crossovers and the histogram

A bullish crossover happens when the MACD line moves above the signal line; a bearish crossover, when it moves below. These crossovers are often used as potential turning points in momentum, especially when they occur well away from the zero line.

The histogram visually represents the distance between the MACD line and its signal line: it is positive when the MACD line is above, negative when it is below, and its height grows or shrinks as the gap between the two lines widens or narrows. A histogram shrinking toward zero even before the actual crossover can hint at momentum fading.

Expert: standard settings and false signals

The historical and most common setting is 12/26/9: a fast 12-period EMA, a slow 26-period EMA, and a signal line that is a 9-period EMA of the gap between the first two. This is the standard most platforms, including this app, use by default.

The MACD remains a lagging indicator: it is built on moving averages, so it reacts after the price move that caused it, never before. In a choppy, range-bound market with no clear trend, the two lines can cross back and forth around zero repeatedly without any lasting move following, producing repeated false signals. It is therefore more reliable in a well-established trend than in a flat market.