MACD (Moving Average Convergence Divergence)
MACD tracks the relationship between two moving averages of price. It shows you momentum shifts through a signal line and histogram, helping you catch trend changes before they're obvious.
Understanding the Concept
Think of MACD as your early warning system. When the MACD line crosses above the signal line, bulls might be taking over. Cross below? Bears could be waking up. The histogram shows you the strength behind moves—bigger bars mean stronger momentum. Day traders love it because it works on any timeframe, from 1-minute scalps to daily swings. But here's the thing: MACD lags a bit since it's based on moving averages. You won't catch the absolute bottom or top, and that's fine. You're trading confirmation, not predictions.
Real-World Example
You're watching SOL and notice MACD crossing bullish on the 4-hour chart. The histogram's growing, showing momentum's building. That's your entry signal. You ride it until MACD crosses bearish again—your exit. Simple.
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