What is Moving Average Convergence/Divergence?
Moving Average Convergence Divergence is a technical indicator developed by Gerald Appel that signals overbought and oversold conditions by measuring the intensity of public sentiment. The Moving Average Convergence/Divergence (MACD) indicator is created by calculating the difference between the 12 day and 26 day exponential moving averages (EMA).
In MarketView, the user is presented a configurable weighting factor. The 12 day weighting factor = 0.1538 and the 26 day weighting factor = .0741.
These weighting factors are calculated by using the following formula:
2/(n+1)
where n = number of periods
What is Moving Average Convergence/Divergence Signal?
By using the Moving Average Convergence Divergence Signal (MACDS) study, The user may include a 9 day EMA to be plotted on top of the MACD as a trigger line to provide buy and sell signals. The 9 day EMA is the EMA of the MACD value.
The Signal 9 day weighting factor = 0.2 and is derived using the same formula as the 12 and 26 day weighting factors.
Where EMA1 is the Exponentially Smoothed Moving Average using w1 and EMA2 is the Exponentially Smoothed Moving Average using w2.