The MAC indicator is an abbreviation for Moving Average Convergence Divergence, and is known in Arabic as the Moving Average Convergence Divergence indicator. It is one of the most popular technical tools used in analyzing financial markets, such as stocks and digital currencies.
MACD Indicator Components:
The indicator consists of three main parts:
1. MACD Line:
It is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period exponential moving average.
This line represents the difference between the two averages, and reflects the price momentum.
2. Signal Line:
It is a 9-period exponential moving average of the MACD line.
It is used to indicate entry and exit points from the market.
3. Histogram:
It represents the difference between the MACD line and the signal line.
If the histogram is positive (above zero), this indicates bullish momentum.
If the histogram is negative (below zero), this indicates bearish momentum.
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How to Read MACD Indicator:
1. Crossovers:
When the MACD line crosses the signal line from bottom to top, it is a buy signal.
When the MACD line crosses the signal line from top to bottom, it is a sell signal.
2. Location relative to the zero line:
If the MACD line is above the zero line, the market is in an uptrend.
If the MACD line is below the zero line, the market is in a downtrend.
3. Histogram:
The expansion of the histogram indicates the strength of the current trend.
The contraction of the histogram indicates the weakness of the trend and the possibility of its reversal.
