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Description
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MACD is a trend catching study which measures the distance between the two moving averages
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It shows the difference between two moving averages, Short term (Fast Moving Avg) & Medium term (Slow Moving Avg)
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As it uses moving average as its basic input, it will eventually follow movements of the stock
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Interpretation
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Readings below 0 indicate stock is in negative momentum
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Readings above 0 indicate stock is in positive momentum
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Along with it, Smoothened MACD is plotted to act as a trigger line to generate crossover signals
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One of the primary benefits of MACD is that it incorporates aspects of momentum and trend in one indicator
- It has the ability to foreshadow moves.
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