MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator that shows the relationship between two moving averages of an asset’s price. It consists of the MACD line, signal line, and histogram. Traders use MACD to spot momentum shifts, trend strength, and potential buy or sell signals.
Example:
If the MACD line crosses above the signal line while the histogram turns positive, it may indicate bullish momentum. A downward cross would suggest bearish momentum.