MACD

MACD has three components. The MACD line is the difference between a fast and a slow EMA (classically 12 and 26) — it measures how far apart momentum is pulling. The signal line is a smoothed (9-period) EMA of the MACD line. The histogram plots the gap between those two lines as bars.

Read them together: when the MACD line is above the signal line, short-term momentum is outrunning the longer term — bullish. When it's below, bearish. The zero line matters too: MACD above zero means the fast EMA is above the slow one, confirming an established uptrend; below zero, a downtrend.

The histogram is the most intuitive part. Growing bars mean the two lines are pulling apart — momentum is accelerating. Shrinking bars mean they're converging — momentum is decelerating, even if price is still moving. The histogram often turns before the lines actually cross, giving an early read on momentum shifts.

A practical habit: watch for the histogram to stop growing and start shrinking while price is still trending. That deceleration is your first hint the move is tiring, well before any crossover or price reversal confirms it.

The classic signal is the crossover: MACD line crossing above the signal line is bullish, below is bearish. These are cleanest and most reliable when they occur in the direction of the higher-timeframe trend — a bullish cross in an uptrend pullback is far better than one fighting a downtrend.

Zero-line crosses are slower but confirm bigger shifts: MACD pushing above zero confirms momentum has flipped genuinely bullish. Like all moving-average-based tools, these signals lag, so they're best for confirming and riding trends rather than catching exact turns.

Just like RSI, MACD divergence is a premium signal: price making new highs while the histogram makes lower highs warns that momentum is draining out of the move. Because MACD and RSI measure momentum slightly differently, the strongest read is when both diverge at once — two independent tools agreeing.

MACD's weaknesses are the usual ones: it lags, and it whipsaws in sideways ranges, firing crossover after crossover that lead nowhere. Use it in trending conditions, confirm with structure, and don't pile it on top of three other oscillators that say the same thing. One momentum tool, read well, beats five fighting for space.