MACD
Technical analysisMoving Average Convergence Divergence — the gap between a fast and a slow EMA, plus a signal line and histogram.
In plain terms
Two averages arguing. The histogram turns first and is the most useful part.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Convergence
Technical analysisA fast and a slow moving average narrowing towards each other — the movement MACD measures as its line returning towards zero.
In plain terms
The C in MACD, and the half people ignore. A narrowing gap means the driver has eased off while the car is still rolling forward.
Histogram
Technical analysisThe bars in a MACD display, plotting the gap between the MACD line and its signal line.
In plain terms
The component that turns first, and the noisiest of the three. Shrinking bars while price still rises mean the driver has lifted off the accelerator.
Signal line
Technical analysisA nine-period EMA of the MACD line, used as the trigger for MACD crossovers.
In plain terms
The classic MACD signal, and a late one. It whipsaws badly in ranging markets, which is precisely why the zero-line filter exists.
Zero line
Technical analysisThe level at which the MACD line reads zero — the point where the 12-period EMA crosses the 26-period EMA.
In plain terms
Take bullish crossovers only above it and bearish ones only below. That single filter removes a large share of losing signals for the cost of a handful of good ones.
Indicator redundancy
Technical analysisThe condition in which several indicators appear to confirm one another while being different arrangements of the same underlying price data.
In plain terms
RSI, Stochastic, Williams %R, CCI and the MACD histogram all agreeing is one opinion reported five times. New information has to come from a different input — volume, breadth, relative strength.