Moving Average Convergence Divergence (MACD)

MACD is a trend-following momentum indicator that plots the difference between two exponential moving averages (typically 12 and 26 periods) alongside a signal line (typically a 9-period EMA of that difference). Traders watch for crossovers between the MACD line and signal line, and for the histogram (the gap between them) to gauge momentum shifts. MACD is a lagging indicator by nature, since it's built from moving averages, so it tends to confirm a trend change after it has already started rather than predict it in advance.