Enter the 12-period exponential moving average and the 26-period exponential moving average to determine the moving average convergence divergence (MACD).
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The following formula is used to calculate the moving average convergence divergence.
MACD = 12 EMA - 26 EMA
- Where MACD is the moving average convergence divergence
- 12EMA is the 12 period exponential moving average
- 26EMA is the 26 period exponential moving average
To calculate the moving average convergence divergence (MACD), subtract the 26 period exponential moving average from the 12 period average.
What is MACD?
MACD, short for moving average convergence divergence, is a metric or indicator used in finance that shows the relationship between the moving averages of a security. The MACD is considered a trend-following momentum indicator.
The moving averages used are the 12-period and 26-period exponential averages.
How to calculate MACD?
First, determine the 12-period moving average. For this example, the exponential 12-period value is found to be $5.50.
Next, determine the 26-period moving average. For this example, this moving average is found to be $3.50.
Finally, calculate the MACD using the formula above:
MACD = 12 EMA – 26 EMA
MACD = $5.50 – $3.50
MACD = $2.00