MACD
The moving average convergence divergence (MACD) indicator helps traders see the trend direction, as well as the momentum of that trend. It also provide a number of trade signals.
When the MACD is above zero, the price is in an upward phase. If the MACD is below zero, it has entered a bearish period.
The indicator is composed of two lines: the MACD line and a signal line, which moves slower. When MACD crosses below the signal line, it indicates that the price is falling. When the MACD line crosses above the signal line, the price is rising.
Looking at which side of zero the indicator is on aids in determining which signals to follow. For example, if the indicator is above zero, watch for the MACD to cross above the signal line to buy. If the MACD is below zero, the MACD crossing below the signal line may provide the signal for a possible short trade.
