What is Moving Average Convergence-Divergence (MACD)

The Moving Average Convergence-Divergence (MACD) was developed in 1700s. The MACD has gained popularity and becomes one of the most powerful momentum indicators. Its methodology is also easily captured by investors and traders. The MACD is generated by subtracting the longer-term moving average (for example 30 days) from the shorter-term moving average (for example 10 days).

Technically, the MACD intends to track the convergence and divergence of the two different terms of moving averages. Mathematically, when these two moving averages move towards each other then we say the convergence is formed. On the other hand, the divergence is formed when these two moving averages go in different directions.

You can obtain MACD data form stockcharts.com. You can observe the following chart to sense the MACD.

                           Source: stockchart.com.

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