The MACD Oscillator is the difference between a short term and a long term moving averages.

The three parameters are the number of periods for the short term moving average, long term moving average and the moving average of the resulting MACD Oscillator.

This shows the convergence and divergence of the 2 moving averages and is plotted as the red line around the zero point. The MACD is presented with its moving average as the green line. The MACD oscillator is available in the Custom Charts section of our site.

The Exponential MACD Oscillator uses the exponential moving averages in the calculations instead of the regular moving averages.

If you put a zero in the third parameter box, the program will not calculate the moving average of the MACD and only the red line will appear, and the resulting MACD is conventionally presented as a histogram for clarity.

When the MACD Oscillator is above the zero line, conventional wisdom interprets this as a bullish signal, and conversely, when the histogram is below the zero line this is interpreted as a bearish signal. The red line being above the green line reinforces a bullish signal, and the red line below the green line reinforces a bearish signal. Other interpretations use crossovers between the red and green lines as market timing signals if the resulting direction of both lines is the same. Going up is bullish, going down is bearish.

MACD Histogram

This is not the same as the Histogram generated by the MACD Oscillator when the third parameter is set to zero. The MACD Histogram requires all three parameters, set the same way as the MACD study above. It only draws one line, which is presented as a histogram and is the difference between the MACD and it's moving average. It is plotted around the zero point.

When the Histogram is above the zero line, conventional wisdom interprets this as a bullish signal, and conversely, when the histogram is below the zero line this is interpreted as a bearish market.