MACD Divergence Strategy
MACD (Moving Average Convergence Divergence) is a technical indicator some traders use to study momentum and spot divergence between price and the indicator.
Open Hapi Trade Account →MACD (Moving Average Convergence Divergence) is a widely used technical indicator that compares two moving averages of an asset's price to help traders spot momentum and potential trend changes. A common approach is watching for the MACD line crossing above or below its signal line, and for divergence, where an asset's price makes a new high or low that the MACD indicator does not confirm, which some traders read as a sign momentum is weakening. Divergence strategies are one tool among many and are typically combined with other indicators, price action and risk management rather than used alone. On an investing app, technical indicators like MACD can be applied on a stock or ETF's price chart to study historical momentum, but past patterns do not guarantee future price movement. Anyone using MACD or divergence analysis should treat it as one input into a broader research process, and understand that all investing carries the risk of loss.
How a MACD divergence strategy works
- MACD compares two moving averages of an asset's price to gauge momentum.
- Traders watch for the MACD line crossing its signal line.
- Divergence is when price makes a new high/low that MACD does not confirm.
- Divergence is typically combined with other indicators and risk management.
- No indicator guarantees future price movement.