Moving Average Convergence/Divergence (MACD)

Moving Average Convergence/Divergence (MACD) compares two exponential moving averages of a security by subtracting the 12 day exponential moving average for a security from its 26 period exponential moving average. It is used to view changes in the trend of the price of a stock. The MACD line is combined with a second line, the Signal line, which is used to help determine if it may be advantageous to buy or sell a security at a certain point in time. The signal line is made up of the 9 period exponential moving average of the MACD line. Generally investors who monitor MACD are long when the MACD line is above the signal line and short when the MACD line is below the signal line

Moving Average Convergence/Divergence = 26 period exponential moving average of price - 12 period exponential moving average of price

Signal line = 9 period exponential moving average of MACD