Moving Average Convergence / Divergence

The Moving Average Convergence/Divergence (MACD) indicator is the difference between two price moving averages:
  • The 26 period exponential moving average (EMA)
  • The 12 period EMA

The MACD is compared to a signal line, which is the 9 period simple moving average (SMA) of the MACD.

The MACD is most useful in volatile markets. It is interpreted in the following ways:

  • A buy signal occurs when the MACD falls below its signal line
  • A sell signal occurs when the MACD moves above its signal line
  • The market is overbought when the MACD rises sharply
  • The market is oversold when the MACD drops sharply
  • A bullish divergence occurs when the MACD makes new highs and the price doesn’t
  • A bearish divergence occurs when the MACD hits new lows and the price doesn’t
The bearish and bullish divergences are more significant when the market is overbought or oversold.

Moving Average Convergence / Divergence


MACD = EMA( CLOSE, 12 ) – EMA( CLOSE, 26 )


You can find more information about technical indicators in the MetaTrader 4 User Guide. Select Help > Help Topics > Analytics > Technical Indicators.