MACD

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Description

The Moving Average Convergence/Divergence indicator (MACD) is calculated by subtracting the value of a 0.075 (26-period) exponential moving average from a 0.15 (12-period) exponential moving average. A 9-period dotted exponential moving average (the "signal line") is automatically displayed on top of the MACD indicator line.

Interpretation

The basic MACD trading rule is to sell when the MACD falls below its 9-period signal line. Similarly, a buy signal occurs when the MACD rises above its signal line.

A variation of the MACD can be created by plotting the following formula:

macd() - mov(macd(), 9, E)

Then change the indicator line style to a histogram and plot a 9-period dotted moving average of the indicator.
In a system test of this indicator, sell arrows are drawn when the histogram peaks and turns down and buy arrows are drawn when the histogram forms a trough and turns up.