trend indicator
Moving Average Convergence Divergence (MACD)
MACD shows the relationship between two moving averages of a price. It reveals both trend direction and momentum strength.
Formula
MACD Line = EMA(12) - EMA(26) Signal Line = EMA(9) of MACD Line Histogram = MACD Line - Signal Line
Common strategies
- Crossover: MACD line crossing above the signal line is bullish; below is bearish.
- Zero line crossover: MACD crossing above zero confirms uptrend; below zero confirms downtrend.
- Divergence: Price and MACD moving in opposite directions signals potential reversal.
How CommonQuant uses it
CommonQuant pre-calculates MACD(12,26,9) on all timeframes. DSL strategies can reference macd_line(), macd_signal(), and macd_histogram() functions.
Frequently asked questions
What is the MACD histogram?
The histogram shows the difference between the MACD line and the signal line. It visualizes momentum strength — growing bars indicate strengthening momentum.
Is MACD good for crypto?
MACD works well in trending crypto markets but can give false signals in choppy/ranging conditions. Combine with volatility indicators like Bollinger Bands.