What’s MACD?

MACD (Moving Average Convergence Divergence) is a technical indicator used in cryptocurrency trading to analyze market trends and identify potential buying or selling opportunities. It is a momentum indicator that calculates the difference between two exponential moving averages (EMA) of different periods, typically 12 and 26 days. The MACD line is created by subtracting the 26-day EMA from the 12-day EMA.

The MACD indicator also includes a signal line, which is a 9-day EMA of the MACD line, and a histogram, which represents the difference between the MACD line and the signal line. Traders use the MACD to identify crossovers between the MACD line and the signal line as potential entry or exit points for a trade.

When the MACD line crosses above the signal line, it is considered a bullish signal, indicating that the cryptocurrency may be in an uptrend. Conversely, when the MACD line crosses below the signal line, it is considered a bearish signal, indicating that the cryptocurrency may be in a downtrend. The histogram can also be used to confirm these signals by showing the strength of the trend.