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MACD: is momentum building or fading?
Shows whether momentum is building or fading by comparing two moving averages.
Illustration on a made-up price series, not market data. Hypothetical, for education only.
What it measures
The MACD line is a fast EMA minus a slow EMA (12 and 26). The signal line is an EMA (9) of the MACD line. The histogram is the gap between the two.
How to read it
- MACD above its signal line (a positive histogram) means upward momentum is stronger than its recent average.
- A shrinking histogram warns that momentum is fading, often before price turns.
- MACD above or below zero tells you whether the fast average is above or below the slow one.
A common mistake
Reading every crossover as a signal. In choppy markets MACD crosses its signal line constantly.
Check yourself
Try it
Run the MACD Momentum template and look at how many trades it makes over a few months.
Open the app
Educational content. Not investment advice. Past or simulated results do not predict future results.