MACD

Figure 8. MACD

MACD stands for Moving Average Convergence and Divergence. It is simply the difference between a shorter period exponential moving average and a longer period exponential moving average. For example,

MACD(8, 17) = EMA(8) - EMA(17)

The MACD is often plotted together with a "Signal Line," the 9-day moving average of the MACD. A basic MACD signal is to buy when the 9-day signal line moves above the MACD line and to sell if it crosses below the MACD line.