## Definition of MACD

**MACD** (*Moving Average Convergence-Divergence*) is a technical analysis indicator **measuring relative position and relative tendency of two exponential moving averages of price** (usually closing price is taken as input). These two exponential moving averages differ only in one thing – the length of the period (i.e. how many days or bars back the particular moving average is looking).

## MACD Line and Signal Line Definition

The distance between the two exponential moving averages is displayed as a line, called the MACD Line. Besides the MACD Line, a chart of MACD usually contains also the Signal Line, which is an exponential moving average of the MACD Line.

## MACD Is Defined by 3 Parameters

Therefore, each MACD is defined by three parameters: the period lengths of the three exponential moving averages. Here you can see a more in-depth discussion about MACD Settings (e.g. which are popular, which are best, and how MACD is sensitive to different parameters).