MACD

MACD (Moving Average Convergence Divergence) is built on the EMAs you met in level 5: in its standard setting, the 26-period EMA is subtracted from the 12-period EMA to produce the MACD line. A 9-period EMA of that line is drawn on top as the signal line. The gap between the two is displayed as bars called the histogram.

How to read it: the MACD line above zero means the short EMA is above the long one — an upward-leaning picture; below zero, the reverse. The MACD line crossing the signal line is traditionally read as momentum beginning to shift. The histogram growing or shrinking shows the two lines pulling apart or converging — momentum strengthening or fading.

MACD's limits are inherited from its building blocks: made of EMAs, it carries the lag of level 5, and in sideways markets its crossovers whipsaw just the same. Running RSI and MACD side by side is usually measuring the same thing twice — both speak momentum. Once you know what each tool measures, you also know that three indicators saying "yes" at once is not three independent pieces of evidence.