MACD Indices Indicator Oscillator Indices Technical Analysis Fast Line and Signal Line
MACD Indices indicator is used in various ways to give technical analysis data.
- MACD center-line crosses indicate bullish or bearish markets: below zero is bearish, above zero is bullish.
- MACD Crossovers indicate a buy or sell trading signal.
- Oscillations can be used to indicate oversold & overbought regions
- Used to look for divergence between stock indices price and indicator.
Construction of MACD Technical Indicator
The MACD indicator is constructed using two exponential moving averages and this stock indices technical indicator plots two lines. The two default exponential moving averages used are 12 and 26. Then a smoothing factor of 9 is also applied when drawing the MACD indicator.
Summary of how MACD indicator is drawn
MACD uses 2 EMAs + a smoothing factor (12, 26 Exponential Moving Averages & 9 smoothing periods)
MACD technical indicator only plots two lines - the MACD fast line and the MACD signal line
MACD Lines - MACD Fast-Line & MACD SignalLines Trading Signals
- The FastLine is the difference between the 26 EMA & 12 EMA
- The Signal Line is the 9 period moving average of the MACD fast line.
Implementation of MACD Indicator
MACD indicator implements the MACD line as a continuous line while the signal line is implemented as a histogram. These two MACD LINES are then used to generate stock indices signals using the crossover trading strategy method.
There's also the MACD center line which is also referred to as the zero mark & it's a neutral point between buyers & sellers trading the stock indices trading market.
Values above the center-mark are considered bullish indices trading signals while those below are bearish stock indices signals.
The MACD indicator being an oscillator indicator, oscillates above & below this center line.
