Definitions for "MACD"
The moving average convergence divergence (MACD) uses two exponential moving...
The MACD measures acceleration/deceleration, overbought/oversold situations, and gives trading signals. It can be used as a trading system or as an oscillator. The MACD consists of: the Fast line which is the difference between two exponential moving averages in which the first one has a shorter time span than the second one; (Moving Average Oscillator) and the Signal line which is an exponential moving average of the fast line. For identification purposes the Fast line will be more erratic than the Signal line. Gerard Appel, who originally developed this formula, suggests 12 and 26 days to calculate the fast line and a 9-day period to get the signal line. T.E Aspray has tested different combinations of inputs for the three exponential moving average values and this optimisation has led him to the conclusion that a 10-20-9 days was the most profitable combination.
Moving Average Convergance Divergence