The MACD Indicator (Moving Average Convergence Divergence) is a popular technical analysis tool among cryptocurrency traders, showing the relationship between short-term and long-term moving averages:
It consists of the MACD line (the difference between the exponential moving averages of two periods, typically 12 and 26 days), the signal line (usually the 9-day exponential moving average), and the histogram (which shows the difference between the two lines).
Buy signals appear when the MACD line crosses above the signal line (indicating bullish momentum), and vice versa for sell signals.
In daily use:
Trading can be initiated when the MACD crosses above the signal line.
Increasing histogram indicates increasing momentum, while its decline indicates weakening momentum.
It is wise to combine it with other indicators such as RSI or support/resistance levels to confirm the signal.