Technical Analysis Topic 20 MACD

Moving Average Convergent Divergent Method (MACD):

In this method, the difference between a shorter period EMA (exponential moving verage) and a longer period EMA is termed as MACD.

For example, in a method represented by MACD(12, 26, 9), the 26-day EMA is subtracted from the 12-day EMA. 9-day EMA of MACD is also calculated and plotted. This line is termed as the Signal line or Trigger line. In general one should own a stock only when the MACD line is above the Trigger line.