Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (MACD) is a technical analysis tool used to identify potential changes in a stock's price trend. It compares two moving averages—one short-term and one longer-term—to see if they are converging or diverging. When the shorter average crosses above the longer one, it may signal an upward trend; vice versa for a downward trend. Additionally, the MACD line's position relative to a zero line and the signal line can help traders assess the momentum and strength of a trend. It’s a way to gauge whether an asset may be gaining or losing momentum.