What is Signal?
A 9-day exponential moving average of the MACD line, used to generate trading signals when it crosses the MACD.
Think of it like this
Like a slower-moving average that smooths out the MACD's movements - crossovers between them trigger buy/sell signals.
Formula
Signal Line = 9-day EMA of MACD- MACD: 12-day EMA - 26-day EMA
- Signal Line: 9-day exponential moving average of MACD
- Crossover: When MACD crosses signal line
Why it matters
- Identifies momentum changes earlier than price
- Crossovers provide clear buy/sell signals
- Confirms trend direction
- Used by traders worldwide for timing entries/exits
What's a good value?
MACD > Signal
Bullish
Upward momentum - potential buy signal
MACD < Signal
Bearish
Downward momentum - potential sell signal
Bullish Crossover
Buy Signal
MACD crosses above signal
Bearish Crossover
Sell Signal
MACD crosses below signal
Real-world example
When MACD crosses above the signal line, it's a bullish signal suggesting upward momentum - traders may buy.
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