Although it is an oscillator, it is not typically used to identify over bought or oversold conditions. It appears on the chart as two lines which oscillate without boundaries. The crossover of the two lines give trading signals similar to a two moving average system. This causes MACD to oscillate around the zero level.
Note: The sample calculation above is the default. You can adjust the parameters based upon your own criteria. SMA is the easiest moving average to construct. It is simply the average price over the specified period. Technical analysis focuses on market action — specifically, volume and price. Technical analysis is only one approach to analyzing stocks.
When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results. Skip to Main Content. Technical Analysis Basic Education. Your Money. Personal Finance. Your Practice.
Popular Courses. Table of Contents Expand. Table of Contents. Calculating MACD. The Bottom Line. MACD triggers technical signals when it crosses above to buy or below to sell its signal line. The speed of crossovers is also taken as a signal of a market is overbought or oversold. MACD helps investors understand whether the bullish or bearish movement in the price is strengthening or weakening. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
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