MACD (Moving Average Convergence Divergence)
A momentum indicator built on two exponential moving averages: its crossovers and histogram measure the acceleration and exhaustion of trends.
The MACD (Moving Average Convergence Divergence) was developed in the 1970s by Gerald Appel. Its idea: rather than watching two moving averages separately, plot their gap directly. When the averages move apart (divergence), the move is accelerating; when they come together (convergence), it is fading. The MACD thus condenses trend and momentum into a single indicator.
How it's calculated
The MACD displays three components, computed with the default 12/26/9 parameters in Screener.Trading : Appel's historical values:
- The MACD line: the difference between the price's 12 EMA (fast) and 26 EMA (slow).
- The signal line: a 9 EMA of the MACD line, which smooths it and acts as the trigger for crossovers.
- The histogram: the difference between the MACD line and the signal line, drawn as bars : it visualizes momentum acceleration.
Unlike the RSI or the Stochastic, the MACD is unbounded: its values depend on the asset's price. There is therefore no universal overbought threshold : what matters is the position relative to zero and the crossovers.
How to read it
- Signal line crossover: the MACD line crossing above its signal is a classic bullish signal; below it, a bearish one.
- Zero line: a MACD above zero means the 12 EMA sits above the 26 EMA : bullish underlying momentum; below zero, bearish momentum.
- Histogram: growing bars indicate acceleration; shrinking bars often foreshadow the upcoming crossover.
- Divergences: price making a new high without a new MACD high signals a weakening trend.
Built on moving averages, the MACD inherits their lag: its crossovers come after the move has begun. In a trendless market, the MACD line oscillates around zero and crossovers follow one another without follow-through : it performs best in directional markets.
In the screener
The MACD's three components (MACD line, signal, histogram) are individually accessible in Screener.Trading rules. Concrete examples: "MACD line above the signal on D1" to list assets with bullish momentum; "MACD line above zero on W1" as a weekly trend filter; "histogram above zero for at most 3 candles" to capture only fresh crossovers.
By crossing timeframes, you can align horizons: for example, require a MACD above zero on D1 (bullish underlying trend) and a bullish line/signal crossover on H4 (entry timing). This kind of multi-timeframe setup can be backtested directly in the platform.
In a range, MACD crossovers produce many false signals. Filter them with the zero line, an ADX or a long moving average before acting.
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- GlossarySignal line (MACD)The signal line is the 9-period exponential moving average of the MACD line, whose crossovers with it serve as buy or sell signals.
- GlossaryMACD histogramThe MACD histogram plots the gap between the MACD line and its signal line, thereby measuring whether momentum is accelerating or fading.
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