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Moving Average Convergence Divergence (MACD)

Description

The Moving Average Convergence Divergence (MACD) was developed by Gerald Appel, and is based on the differences between two moving averages of different lengths, a Fast and a Slow moving average. A second line, called the Signa” line is plotted as a moving average of the MACD. A third line, called the MACD Histogram is optionally plotted as a histogram of the difference between the MACD and the Signal Line.

Formula

MACD = FastMA - SlowMA

Where:

  • FastMA is the shorter moving average and SlowMA is the longer moving average.
  • SignalLine = MovAvg (MACD)
  • MACD Histogram = MACD - SignalLine
Example