7.20What is MACD?
1What is it?
MACD (Moving Average Convergence Divergence) is the 12-period EMA minus the 26-period EMA. A 9-period EMA of MACD is the signal line; the gap between them is the histogram.
2Why does it exist?
It shows momentum and trend changes. MACD crossing above its signal line is considered bullish; below, bearish.
3Calculation
MACD = EMA(12) − EMA(26); Signal = EMA(9) of MACD
- EMA12 = ₹505, EMA26 = ₹498 → MACD = +7
- Signal = +5 → histogram = +2 (bullish momentum)
MACD above signal: momentum is up.
4Quick revision
- EMA12 − EMA26.
- Signal line crossovers.
- Lags price.
5Knowledge check
Q1. What is the MACD line?Show answer
EMA(12) minus EMA(26).
Q2. MACD crossing above its signal line suggests?Show answer
Bullish momentum.
Q3. Does MACD lead or lag price?Show answer
Lag.