Technical analysis · updated October 21, 2026
What is MACD and how is it calculated
MACD tracks the gap between two averages of the price, a fast one (12 days) and a slow one (26 days), to show when the price's pace is changing. It has three parts: the MACD line, the signal line and the histogram between them.
MACD formula
- Signal line
- The 9-day exponential average of the MACD line.
- Histogram
- The MACD line minus the signal line: it grows when the pace picks up.
- Exponential average
- An average that gives more weight to recent days.
Worked example
The fast average is $105, the slow one $102, and the signal 2.2.
A positive and growing histogram shows the rise is picking up speed.
How to read MACD
Investors watch for the moment the MACD line crosses above or below the signal line.
When MACD can fool you
It lags, like any indicator built from averages. No direction: in a flat market it gives many conflicting signals.
Related terms
Questions about MACD
What does it mean when MACD crosses above zero?
That the 12-day average has moved above the 26-day one: the short-term trend has turned positive.
These explanations are for information only. They are not a recommendation to buy or sell.
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