UK Accounting Glossary
MACD, which stands for Moving Average Convergence Divergence, is a technical indicator designed to compare price fluctuations of stocks and futures. Specifically, MACD derives data by calculating the relationship between two exponential moving price averages. By plotting 12 and 26-day exponential moving averages, and then contrasting the two, MACD helps forecast market momentum on what’s called a signal line. Hence, various positions along MACD signal line signify bullish or bearish market propensities. Divergences, crossovers, and dramatic rises are some of the MACD readings of market trends, through which MACD sets up buy and sell guideposts. An oscillator based method, MACD was developed by Gerald Appel. As with all other market indicators, MACD is best utilized in combination with other technical indicators.
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This glossary post was last updated: 7th February 2020.