MACD Indicator

“The trend is your friend until it is the end”

The MACD is a trend-following indicator used by many traders and investors. MACD stands for Moving Average Convergence Divergence. If you have not read the moving average page you should click here. It is very important to remember that the MACD indicator uses exponential moving averages (EMA) instead of simple moving averages (SMA). The MACD indicator helps to identify the momentum of price moves and I personally use it when timing trades. The MACD indicator contains the following:

. MACD Line
. MACD Signal Line
. MACD Histogram
. Zero Line

Firstly we will break down the MACD indicator, from there we look at how to use it and what to look for.