The MACD line is the difference between:

12 EMA and 26 EMA. It is 12 EMA minus 26 EMA.

MACD minus signal. The gap between the MACD and signal lines.

Lagging momentum tool. It is based on moving averages.

MACD: Moving Average Convergence Divergence

A momentum indicator built from two EMAs, a signal line and a histogram.

MACD subtracts a 26-period EMA from a 12-period EMA to get the MACD line. A 9-period EMA of that line is the signal line. The histogram shows the gap between them.

A MACD line crossing above the signal line is a bullish momentum signal, below is bearish. The zero line separates bullish from bearish momentum. Divergence between price and MACD can warn of a weakening trend.

Like all moving average tools it lags. Use it with trend direction and levels, not alone.

Key takeaways

MACD line = 12 EMA minus 26 EMA, signal = 9 EMA of MACD
Crossovers and zero line show momentum
Divergence warns of weakening trends

Quiz

The MACD line is the difference between: Answer: 12 EMA and 26 EMA. It is 12 EMA minus 26 EMA.
The histogram shows: Answer: MACD minus signal. The gap between the MACD and signal lines.
MACD is a: Answer: Lagging momentum tool. It is based on moving averages.

Educational content, not financial advice.