Moving Average Convergence Divergence

MACD is an enhanced study of the moving averages and behaves as an oscillator. The MACD plots the difference between a 26-day exponential moving average and a 12-day exponential moving average. A 9-day moving average is generally used as a trigger line, meaning that when the MACD crosses below this trigger it is a bearish signal, and when it crosses above it, it"s a bullish signal.

Traders use the MACD for trend reversals. For instance, if the MACD indicator turns higher while prices are still falling, this could be an exit point and a possible reverse trade.