MACD
MACD is a trend and momentum indicator that shows the difference between two exponential moving averages (usually 12 and 26) along with its signal line.
How it works
MACD has three parts. The MACD line = 12 EMA − 26 EMA. The signal line is a 9-period EMA of the MACD line. The histogram is the gap between the MACD line and the signal line. The 12, 26, 9 settings are standard but can be changed.
When the MACD line is above zero, the short average is above the long one and momentum is broadly bullish. The MACD line crossing above the signal line is read as strengthening upside momentum, crossing below as weakening. The histogram shows whether momentum is speeding up or fading.
Another use is divergence: price makes a new high but MACD does not, which hints that momentum is weakening. MACD lags because it is built from moving averages, and in a range it gives many false crossovers.
On the BTC daily chart: 12 EMA = $61,200, 26 EMA = $60,800. MACD line = +400. Signal line = 350, histogram = +50. If a few days later MACD drops to 330 and crosses below the signal line, the histogram turns negative: upside momentum is fading.
The mistake is trading every MACD and signal line crossover on any timeframe. In a range those signals come one after another and nearly all are false. Look at trend and levels first, and use MACD to confirm momentum, especially on the 4-hour chart and above.
Questions and answers
What is MACD in simple terms?
It is an indicator that shows whether a price move is speeding up or slowing down by comparing a fast and a slow moving average.
How do you read the MACD histogram?
Bars above zero and growing mean bullish momentum is strengthening; shrinking bars mean it is fading. Below zero, the same applies to bearish momentum.
What are the best MACD settings?
The standard 12, 26, 9 works in most cases. Change them only after testing on history, or you risk fitting the indicator to the past.
Related terms
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Updated: 2026-10-19