MACD
A momentum indicator that compares moving averages to help traders spot possible trend changes in a crypto asset’s price.
MACD stands for Moving Average Convergence Divergence. It is a technical analysis indicator that compares two moving averages of an asset’s price, usually the 12-period and 26-period exponential moving averages. The result is the MACD line, which is often plotted with a 9-period signal line and a histogram showing the gap between them. In crypto markets, traders use MACD to assess whether price momentum may be strengthening, weakening, or shifting direction.
MACD matters because it can make trend changes easier to see than price candles alone, especially in fast-moving markets. A common use is watching for the MACD line to cross above the signal line, which may suggest improving upward momentum, or below it, which may suggest weakening momentum. Traders may also compare MACD with price action: if a coin’s price makes a higher high while MACD makes a lower high, that divergence can warn that the move is losing strength. Like all indicators, MACD is not a prediction tool and is usually used with other context.
Other terms in Technical Analysis
Bollinger Bands
A volatility indicator that plots bands around a moving average to show when a crypto asset may be unusually high, low, or entering a volatile period.
Bullish Divergence
A bullish divergence is a chart signal where price makes lower lows while an indicator makes higher lows, hinting that selling pressure may be weakening.
Candlestick Chart
A price chart that shows an asset’s open, high, low, and close over repeated time periods.
Fibonacci Retracement
A charting tool that marks possible support and resistance levels based on Fibonacci ratios after a price move.