MACD Calculation, Crossovers, Divergence, and Parameter Tuning
Summary
The document explains MACD as the difference between short and long exponential moving averages, with a signal line formed by smoothing MACD and a histogram showing the gap between the two. It gives the common 12, 26, and 9 periods and describes how changing the periods affects responsiveness and smoothness.
It presents upward and downward MACD crossovers as potential buy and sell cues, respectively, and discusses histogram sign changes and divergence between price and MACD as possible clues to shifts in momentum or trend. It also suggests combining MACD with other indicators, such as moving averages or RSI. These are general technical-analysis interpretations; the document provides no tested performance evidence, and its signals are not guarantees of profitable timing.
Key ideas
- MACD is the difference between a short-period and a long-period exponential moving average of closing prices.
- The signal line smooths MACD, while the histogram displays the difference between MACD and its signal line.
- Crossovers, histogram changes, and price–indicator divergence are presented as possible trading cues.
- Shorter periods make the indicator more responsive, while longer periods make it smoother.
- The document recommends considering MACD alongside other indicators and market context.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.