Moving Average Convergence Divergence (Moving Average Convergence Divergence, MACD) is a technical indicator developed by Gerald Appel. It is used to assess the strength and direction of a trend, as well as to identify possible price reversal points by means of signals obtained from several data series that are combinations of moving averages.
What MACD consists of
- The MACD line — the difference between the fast and slow exponential moving averages;
- The signal line — a smoothed moving average of the MACD line;
- The histogram — a visual representation of the difference between the MACD line and the signal line.
Traders interpret a crossover of the MACD line and the signal line as a possible signal of a change in the direction of movement. Divergence, when the price and the indicator move in opposite directions, often points to a weakening of the current trend. In the crypto market, MACD is widely used in technical analysis; however, its signals do not provide absolute accuracy and are used in combination with other tools and confirmations.
