what is macd

MACD stands for Moving Average Convergence/Divergence, which is a trading indicator used in technical analysis of securities prices. It was created by Gerald Appel in the late 1970s and is designed to reveal changes in the strength, direction, momentum, and oversold or overbought conditions of a stocks price trend. The MACD indicator is a collection of three time series calculated from historical price data, most often the closing price. These three series are the MACD series proper, the "signal" or "average" series, and the "divergence" series, which is the difference between the two. The MACD series is the difference between a "fast" (short period) exponential moving average (EMA) and a "slow" (longer period) EMA of the price series. The MACD can be used to identify changes in the direction or strength of a stocks price trend, and traders can use it to decide when to enter, add to, or exit a position. The MACD is a lagging indicator since it is based on historical data, but some traders use MACD histograms to predict when a change in trend will occur. The MACD can be calculated by subtracting the value of a 26-period EMA from a 12-period EMA, and a signal line is created with a 9-period EMA of the MACD line. The MACD can be used to analyze the state of the price action and identify potential buy and sell signals.