MACD –> Histogram –> Disparity
MACD is a popular indicator created by Gerald Appel. MACD stands for Moving Average Convergence Divergence. When we plot two moving averages in a chart, the trend is considered bullish when the short-term moving average (Lower parameter) is above the long-term moving average (higher parameter) and bearish when the short-term average is below long-term average. Can you decipher why this is the case? Ask yourself what will cause the short-term average to be above the long-term average? The short-term average will be above the long-term average when there are more bullish prices in short-term.. right? So, if the short-term trend is strong, the distance between both averages will increase. So, the distance between averages can be an important indicator to gauge the strength of the short-term trend. MACD line calculates the difference between two averages. Short term average – Long term average = MACD So, When the Short-term MA > Long-term MA, the MACD line will b...