Learn Trading Indicators
Master the indicators that power the TrAIde AI Score
MACD (Moving Average Convergence Divergence)
MACD detects momentum shifts by comparing fast and slow exponential moving averages.
What is MACD?
MACD consists of three components: - **MACD Line**: 12-period EMA minus 26-period EMA - **Signal Line**: 9-period EMA of MACD line - **Histogram**: MACD line minus Signal line
The histogram oscillates around zero, turning positive/negative as momentum shifts.
Standard Interpretation
- **Positive Histogram**: Bullish momentum (MACD > Signal) - **Negative Histogram**: Bearish momentum (MACD < Signal) - **Histogram Divergence**: Momentum exhaustion before price reversal
TrAIde's MACD Strategy
1. **7-Day Averaging**: We average the MACD histogram across 7 days 2. **5x Amplification**: We multiply the averaged histogram by 5 to boost sensitivity 3. **Sustained Trends Only**: - Positive average = bullish momentum = +points - Negative average = bearish momentum = -points - Flat histogram = no directional bias
The histogram's sign directly influences the TrAIde Score. A sustained 7-day positive histogram can add +30 to the score.
Why Not Use Signal Line Crossovers?
Daily signal crossovers create whipsaws. By averaging 7 days, we capture only sustained momentum shifts.