MACD (Moving Average Convergence Divergence) is a momentum indicator built from the difference between a fast and a slow exponential moving average — classically the 12- and 26-period EMAs — plotted as the MACD line, with a 9-period EMA of that line as the signal line and their gap drawn as a histogram. It compresses trend and momentum into one oscillator.
Three readings are standard: the MACD line crossing its signal line (a momentum trigger), the MACD line crossing zero (the fast EMA crossing the slow one, a trend trigger), and divergence between MACD and price (weakening momentum). The histogram visualizes momentum accelerating or fading as the two lines converge and diverge.
Because MACD is built from lagging EMAs, it inherits their lag and whipsaws in ranges. MACD-cross baselines in Secuora’s research at /strategy lost money on BTC over twelve months after costs — a popular, well-known indicator is still not an edge once trade frequency meets real fees.
If EMA(12) = $101 and EMA(26) = $100, the MACD line = 101 − 100 = +1. With a signal line at +0.6, the histogram = 1 − 0.6 = +0.4 (momentum positive and above signal).