Moving Average Convergence Divergence (MACD)
- Momentum indicator calculated by taking the difference of two moving averages of an asset price (typically 12 period MA and 26 period MA).
- A signal line is also calculated which is again a MA (typically 9 period) of the MACD line
- The MACD line cutting the signal line from below signals bullish period and the former cutting the latter from above signals bearish (also called crossover strategy)
- Many false positives -- especially during sideways market
- Suggested to be used in conjunction with other indicators
- Lagging indicator - trails behind the actual price action