Moving Average Convergence Divergence (MADC)

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Moving Average Convergence Divergence (MADC)
Oscar Pyngrope, Student (MBA), India, Premium Member
WHAT IS MOVING AVERAGE CONVERGENCE DIVERGENCE (MADC)
MADC is a technical analysis indicator. It is used to spot changes in the direction and momentum of a trend in a stock's price.
The MADC uses the difference between the short term price trend (12-day Exponential Moving Averages (EMA)) and the long term price trend (26-day EMA) to anticipate future movements.

HOW TO CALCULATE MADC
To calculate the MADC subtract the 12 day EMA from the 26-day EMA, then plot a 9-day EMA also known as the “signal line”on top of the MACD on a chart, which functions as a trigger for buying and selling decisions.

INTERPRETING THE MADC CHART
  • A positive MACD line indicates that the 12-day EMA is above the 26-day EMA, this means upside momentum is increasing.
  • A negative MACD line indicates that the 12-day EMA is below the 26-day EMA, this means downside momentum is increasing.
SIGNALS GENERATED BY THE MACD INDICATOR
 

 
 

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