Moving Average Convergence Divergence (MACD)
Moving Average Convergence Divergence by Gerald Appel is a tool used to monitor trend changes using two moving averages, the slow EMA and the fast EMA. The traditional slow Exponential Moving Average has a 26 day period while the fast EMA has a 12 day period moving along the 9 day EMA that acts as a bullish or bearish trigger line. Since moving averages are lagging indicators, it is used as a confirmation signal that a trend is underway but provides no accurate forecast on a ranging market. A new trend signal is registered when the fast 12 day EMA crosses the 26 day EMA, and further trend formation is confirmed when it crosses over the 9 day EMA trigger line.
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