Technical Analysis Part - 4

4 Nov

The MACD is a momentum indicator that can be used to anticipate changes in market sentiment. However, it is not foolproof: experienced traders look to other metrics, such as trading volume, for a more complete perspective on market sentiment.

Key Takeaways

The moving average convergence divergence (MACD) is a popular momentum indicator that is used in technical analysis.
The MACD is calculated by comparing exponential moving averages in a security's price.
The MACD line is charted alongside a nine-day moving average of the MACD line, called the signal line, and a histogram representing the difference between these two curves.
Traders use the MACD histogram to anticipate changes in market momentum.
MACD analysis can still generate false price predictions. Experienced traders use additional metrics and fundamental analysis to support their forecasts.