In plain English
What MACD means
MACD turns the relationship between a short-term and a longer-term price average into a separate chart. When the faster average rises above the slower one, the MACD line is positive; when it falls below, it is negative. A signal line smooths the MACD line, while the histogram shows how far apart the two lines are.
Why it matters
MACD can help describe momentum and trend direction using a consistent calculation rather than visual judgment alone. It is lagging because it is built from moving averages, so a crossover or histogram change is not a guarantee that price will continue in that direction. Settings and formulas can also differ slightly by platform.
Example
Assume a currency pair’s 12-period exponential moving average is 1.0860 and its 26-period average is 1.0825. The MACD line is 0.0035, or 35 pips in this simplified example. If its 9-period signal line is 0.0028, the histogram is 0.0007, indicating the MACD line sits above its signal line.
Quick answers
Common questions
What does a positive MACD mean?+
A positive MACD means the fast exponential moving average is above the slow exponential moving average for the selected settings. It describes the recent average-price relationship, but does not by itself establish a future price direction.
What is the MACD histogram?+
The MACD histogram plots the difference between the MACD line and its signal line. A positive histogram means the MACD line is above the signal line; a negative histogram means it is below.
Sources