MACD (Moving Average Convergence Divergence)

The MACD (Moving Average Convergence Divergence) is a trading indicator that helps identify the strength and direction of a stock's price trend. It compares two moving averages—typically the 12-day and 26-day averages—to see if they are converging or diverging. When the shorter average crosses above the longer one, it suggests potential upward momentum; crossing below indicates possible downward movement. The MACD line, along with its signal line, provides buy or sell signals, while the histogram shows the difference between them, signaling changes in trend strength. It's a tool to assist traders in making informed decisions about market momentum.