Moving Average Convergence Divergence, or MACD, is an indicator built from the relationship between a faster and a slower moving average. Its lines and histogram help display how that relationship changes over time.
Three related components
A common setup subtracts the 26-period exponential moving average from the 12-period EMA to produce the MACD line. The signal line is a 9-period EMA of that MACD line. The histogram is the MACD line minus the signal line.
For example, if the two price EMAs are $103 and $100, the MACD line is $3. If its signal line is $2, the histogram is $1 under this convention. These bars show a difference between indicators, not traded volume. Platform settings and display conventions can vary.
Distinguishing crossovers
A MACD-line crossing of zero means the fast and slow price averages have crossed. A crossing of the signal line instead changes the histogram’s sign; it can happen while MACD remains below zero.
These observations use historical prices and can lag a turn. Frequent crossovers in a sideways market can be misleading. MACD has no fixed 0–100 range, and its raw size should not be compared across differently priced assets as if it were a percentage.