What does MACD mean?

MACD (Moving Average Convergence Divergence) measures the difference between two exponential moving averages to gauge a stock's momentum.

MACD = 12-EMA minus 26-EMA, plotted with a 9-EMA 'signal line'. When MACD crosses above the signal line, momentum is shifting bullish. When it crosses below, momentum is turning bearish. The histogram shows the gap between them.

MACD example

MACD is the 12-day EMA minus the 26-day EMA. If those are $102 and $100, the MACD line is +2. When it crosses above its 9-day signal line, momentum is turning up; below it, momentum is fading.

Common beginner mistake

Reading MACD on a single day. It's built from averages, so it confirms trends rather than calling turns — and it whipsaws in sideways markets.