Difference between a fast EMA and a slow EMA, with a signal-line EMA of that difference. Combines trend and momentum in one indicator.
MACD = EMA(12) − EMA(26) Signal = EMA(9) of MACD Histogram = MACD − Signal
Trend direction (MACD line vs zero), crossover signals (MACD line vs signal), divergence (price makes new high, MACD histogram does not).
Late crossovers in fast-moving markets. Divergences can persist for many bars before price responds.
Nifty 50 daily bars with MACD pre-loaded:
2 strategies use MACD: