Interpretation of MACD Indicator
What is MACD? What are the components of MACD
A standard MACD chart consists of four parts: two lines, one column, and one zero axis
1. DIF line (fast line) 2. DEA line (slow line) 3. MACD histogram (energy column) 4. Zero axis
Visually displays the distance difference between the fast and slow lines. The height and direction changes of the histogram are very important
How to use MACD:
Change of energy column: Insight into the strength of momentum
Histogram growth: Indicates strengthening momentum for upward (green column) or downward (red column) movements.
· Histogram shortening: Indicates that the current directional momentum is weakening.
· 'Peaks' and 'Valleys': The turning point where the histogram changes from elongation to shortening often leads price turning points and can serve as an early warning.
