📊 Technical Indicators
What is MACD and How Do You Use It?
MACD is a trend-following momentum indicator showing the relationship between two moving averages of an asset's price.
MACD (Moving Average Convergence Divergence) is a powerful trend-following momentum indicator developed by Gerald Appel in the late 1970s. It's used to spot changes in the strength, direction, momentum, and duration of a trend.
MACD Components
The MACD indicator consists of three parts:
- . **MACD Line**: The difference between the 12-period EMA and 26-period EMA
- . **Signal Line**: A 9-period EMA of the MACD line
- . **Histogram**: The difference between the MACD line and signal line
Key MACD Signals
- **Bullish Crossover**: MACD line crosses above the signal line - potential buy signal
- **Bearish Crossover**: MACD line crosses below the signal line - potential sell signal
- **Zero Line Crossover**: MACD crossing above zero confirms uptrend, below zero confirms downtrend
- **Divergence**: Price and MACD moving in opposite directions can signal potential reversal
MACD in Cryptocurrency Trading
MACD works well for identifying trend changes in crypto markets. However, because crypto is highly volatile, false signals can occur. Many traders use MACD in combination with RSI and volume analysis for confirmation.
💡 Key Points
- ✓MACD uses 12, 26, and 9-period EMAs by default
- ✓Crossovers signal potential trend changes
- ✓The histogram shows momentum strength
- ✓MACD divergence can predict reversals
- ✓Works best in trending markets, not sideways action
How to Use MACD (Moving Average Convergence Divergence)
- 1Enter long positions on bullish MACD crossovers above zero line
- 2Enter short or exit longs on bearish MACD crossovers below zero
- 3Watch for histogram growing/shrinking to gauge momentum
- 4Combine with RSI for stronger confirmation signals
- 5Use our MACD Bullish screener preset to find crossover signals
⚠️ Common Mistakes to Avoid
- ✗Trading every crossover without considering the overall trend
- ✗Ignoring the zero line - crossovers above zero are more bullish
- ✗Not waiting for confirmation from price action
- ✗Using MACD in choppy, sideways markets where it produces many false signals
Try It in Action
Apply MACD (Moving Average Convergence Divergence) to find trading opportunities.
Find MACD Bullish Crossovers →