MACD indicator consists of
– MACD line, SIGNAL line and MACD histogram
MACD line is made up of 2
EMA’s (default value of EMA’s used are 12 & 26)
The SIGNAL line is made up
of the MACD line smoothed with another EMA (default value of EMA used is 9)
To calculate MACD using
default values –
1. Calculate a 12 period (day
/ week / month etc) EMA of closing prices.
2. Calculate a 26 period (day
/ week / month etc) EMA of closing prices.
3. Subtract the 26 period
(day / week / month etc) EMA from the 12 period (day / week / month etc) EMA
and plot their difference … this is your MACD line.
4. Calculate a 9 period (day
/ week / month etc) EMA of this MACD line which we calculated above in step 3.
… this is your SIGNAL line.
5. MACD histogram is plotted
as MACD line – SIGNAL line.
MACD IS CALCULATED
AUTOMATICALLY THESE DAYS USING COMPUTERS
Just
in case, if you want to try calculating it manually !
Click to Calculate MACD Manually
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