The Moving Average Convergence Divergence (MACD) is a popular technical indicator that is used to identify buy and sell signals in the financial markets. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A 9-day EMA of the MACD, known as the "signal line", is then plotted on top of the MACD.
The most common method of interpreting the MACD is to look for a crossover of the MACD and signal line. When the MACD crosses above the signal line, it is considered a bullish signal, or a "buy" signal. Conversely, when the MACD crosses below the signal line, it is considered a bearish signal, or a "sell" signal.
Additionally, there are other ways to use the MACD to generate buy and sell signals, such as looking for divergences or positive/negative values.
It's important to note that the MACD is a lagging indicator and should be used in conjunction with other analysis techniques and indicators to confirm any signals.
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