The MACD and a wave formation pattern.
MACD is an acronym for Moving Average Convergence and Divergence.
A moving average is simply a measure of currency or financial instrument price fluctuation over a set period of time. The MA can be applied to any time frame. A time frame is broken down into periods such that an hourly time frame is a graph or forex chart where each bar is a period of one hour.
The MACD is a technical indicator and considered to be a momentum indicator. The moving average convergence divergence momentum indicator was developed by Gerald Appel in the late 1970's.
As a momentum indicator the MACD is a wave formation tool which can be used to identify trends in trader sentiment.
A trend is one where there is divergence away from the mean or average. A price that diverges away from the moving average eventually converges back towards the mean.
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