Moving Average Convergence Divergence
MACD
What it is
MACD compares two exponential moving averages (12 and 26 days) against a signal line (9 days). It's a momentum indicator — it tells you whether the trend is accelerating or losing steam.
How to read it
When the MACD line crosses above the signal line, it's a buy signal (bullish crossover). When it crosses below, it's a sell signal. The histogram (gap between the two lines) shows the magnitude of momentum.
Common reference points
- Bullish crossover — positive momentumMACD > Signal
- Bearish crossover — negative momentumMACD < Signal
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
MACD is a lagging indicator — it confirms a trend already in place rather than anticipating it. Generates false signals in trendless (range-bound) markets.
Other measures — Technical
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