Moving Average Convergence Divergence (MACD)

MACD is a technique that utilizes two exponential moving averages (EMA – moving average that favors recent data point). One EMA is adjusted to represent data of a specified period (I.E., 12 days) while the other period an average of a more extended period (I.E., 26 days). The Moving Average Convergence Divergence discerns the difference between the 12 and 26 day EMA to give a short to medium term trend of an asset's price action. A line that represents the MACD is charted along with a MACD EMA of a specified time interval to observe potential trade signals.

 

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