MACD

1
MACD

• Moving Average Convergence Divergence

2
Overview

• Developed by Gerald Appel
• Trend following Oscillator
• MACD is calculated from three EMAs

3
Calculation for MACD

• Calculate 12-day EMA of closing price
• Calculate 26-day EMA of closing price
• Subtract 26-day EMA from 12-day EMA to obtain
  MACD line
• Calculate a 9-day EMA of the MACD line to obtain
  the signal line

4
Interpretation

• Buy signals are given when the MACD line crosses
  above the signal line
• Most traders today use a 8-17-9 MACD to generate
  buy signals

5
MACD Chart

6
Interpretation cont

• Sell signals are given when the MACD line crosses
  below the signal line
• Most traders use a 12-25-9 MACD to confirm sell
  signals

7
MACD Chart
8
Conclusion

• Crossovers identify shifts in the balance of
  power between buyers and sellers

9
Questions