How do I read MACD crossovers and divergence?
I see the lines crossing all the time. Which crossovers matter, and what is divergence?
For education only. This is not financial advice. Trading carries a high risk of loss.
Log in to reply.
1 Answer
Best answer
MACD has a MACD line, a signal line and a histogram. When the MACD line crosses above the signal line it shows momentum turning up, and the opposite for a cross down. A cross near or above the zero line is a stronger sign than one far below it.
The histogram shows the gap between the two lines, so a shrinking histogram warns that momentum is fading.
Divergence means price makes a new high while MACD does not. It can warn of a weaker trend, but it can last a long time, so wait for price action to confirm. MACD is a lagging tool, so use it together with trend and levels.
Log in to reply.
