Developed by Gerald Appel, the Moving Average Convergence/Divergence(MACD) is a momentum indicator used to show the relationship between a 26-day and 12-day Exponential Moving Average with a 9-day Exponential Moving Average (the "signal" or "trigger") line plotted on top to show buy/sell opportunities.
Signals from the MACD Indicator can tend to lag behind price movements. The MACD Histogram is an attempt to address this situation showing the divergence between the MACD and its reference line (the 9-day Exponential Moving Average) by normalizing the reference line to zero. As a result, the histogram signals can show trend changes well in advance of the normal MACD signal.
A buy signal is generated as the histogram crosses above the zero point. A sell signal is generated as the histogram crosses below zero.
MACD Histogram was developed by Thomas Aspray in 1986.
Calculation:
MACD = MACD indicator value
EMA = MACD signal line value
Inputs: None
Indicator Type: Momentum, Trend