MACD
MACD compares two fast/slow exponential averages. When the fast line crosses the slow line, it signals a trend change.
What It Measures
Momentum and trend change: the gap between short-term and long-term momentum.
The Math (Simplified)
Subtract a slow average (26) from a fast one (12) to get the MACD line. Then average that line (9) to get the signal line. Crossings mark shifts in momentum.
Default Inputs & Tuning
12, 26, 9 is the classic set. The histogram shows how far apart the lines are, i.e. how strong momentum is.
When It Works (Market Edge)
Trending markets: crossings align with genuine momentum shifts.
When It Fails
Sideways markets: MACD crosses the signal line constantly while price goes nowhere — the classic whipsaw.
Common Myths
Myth: MACD crosses are reliable buy/sell triggers.
Truth: In ranges the line crosses several times per month and each cross is often a losing trade. Crosses alone have no edge without trend context.
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