What is the MACD Indicator?
The Moving Average Convergence Divergence (MACD) is a lagging indicator used to locate trends within the market. It consists of a histogram and two lines derived from moving averages. It is important to note that the moving averages used are exponential, and thus will give greater weight to more recent price action. This helps traders identify whether a trend is getting stronger or weaker based on the slope of the MACD lines. The histogram simply shows the difference between the two lines, giving a visual representation. Thus the histogram is positive when the faster EMA line is on top, and is negative when the faster EMA line is on the bottom.