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Indicators

MACD

MACD (Moving Average Convergence Divergence) is a momentum indicator built from the difference between two moving averages. It has the MACD line, a slower signal line and bars (the histogram) showing the gap between them.

Skenuok.lt teamPublished 3 min read

The price, the MACD and signal lines crossing upward, and a histogram around zero.
Example: When the MACD line crosses above the signal line and the histogram bars turn positive, upward momentum is building.

What MACD is made of

Gerald Appel created the indicator in the late 1970s. The standard setting is 12, 26, 9:

  1. MACD line: the 12 period exponential moving average (EMA) minus the 26 period EMA.
  2. Signal line: a 9 period EMA of the MACD line. It is slower and smoother.
  3. Histogram: bars showing the distance between the MACD line and the signal line.

How traders read it

  • Crossover: when the MACD line crosses above the signal line, momentum turns up; when it crosses below, down. More in crossover.
  • Zero line: MACD above zero means the faster average is above the slower one.
  • Shrinking histogram: the bars get shorter, so momentum is fading even if price still moves the same way.
TipThe histogram often starts shrinking before the lines cross, because it shows the gap between them closing.

Real example: ETH in spring and summer 2025

On 9 April 2025 ETH/USDT fell to 1,385. The MACD line crossed above the signal line only on 14 April, with price around 1,624: the indicator lagged by five days because it is built from averages. A rise to 2,738 followed on 13 May. From 10 June to 2 July price swung between 2,112 and 2,879 with no clear direction, and the lines crossed five times in that period. In a market like that, crossovers are often false.

ETH/USDT daily chart from late March to July 2025. Marked: the 1,385 low, the later MACD bullish crossover at 1,624, the rise to 2,738 and the sideways stretch from 10 June to 2 July.
ETH/USDT, 1D, 2025-03-25 to 2025-07-20, Binance data. The chart shows price candles only; the MACD (12, 26, 9) crossover dates were calculated from daily closes. Not investment advice.

Common mistakes

  • Treating every crossover as a trade signal. In a sideways market there are many, and most mean nothing.
  • Forgetting the lag. MACD is built from averages, so it reacts after price has already moved. See lagging indicators.
  • Comparing MACD values between coins. MACD is measured in price units, so the numbers for BTC and a cheap coin cannot be compared.
  • Looking only at MACD and ignoring price structure. A crossover with price sitting right under strong resistance means something quite different from one after a breakout.

How to practise

Pick one coin and the daily chart. Mark every MACD crossover over the last six months and note whether the market had a clear trend or was moving sideways at the time. Mark crossovers above and below the zero line separately. You will quickly see where the indicator helps and where it is only noise. How indicators fit with patterns is covered in Chart patterns.

RiskThis content is for education only and is not financial or investment advice. Crypto trading carries a high risk of loss. We do not promise profits.

Frequently asked questions

What do the MACD settings 12, 26, 9 mean?
12 and 26 are the periods of the faster and slower exponential averages, 9 is the period of the signal line. On a daily chart these are days, on an hourly chart hours.
Does MACD work for crypto?
It can be calculated from any price, crypto included. But crypto prices swing hard, so false crossovers are common. MACD is more useful together with trend, levels and volume than on its own.
What is MACD divergence?
When price makes a new high but the MACD high is lower, or the reverse with lows. It shows the move is losing strength but does not guarantee a reversal. More in divergence.

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