What are the two lines and the bars in MACD?
It is a tool that looks at the difference between a fast average and a slow average. It is easier to read by dividing it into three parts.
Table of contents
Remember this first
First, 3 things to remember
- 1The MACD line is the difference between two moving averages.
- 2The signal line is a line that averages the MACD again.
- 3The bars show how far apart the two lines are.
It compares a fast average and a slow average.
A short-term average reacts quickly to price changes, while a long-term average follows more slowly. The MACD is a line plotted by subtracting these two averages. Typically, EMAs of 12 and 26 bars are used. The EMA is an average that reflects recent prices more heavily.
The signal line is a moving average of the MACD. A common setting is 9. Instead of memorizing 12, 26, and 9 at first, you can understand it as a line comparing averages and a smoothed version of that line.
The bars represent the gap between the two lines.
A histogram means a vertical bar chart; here, it shows the value of the MACD minus the signal. If the MACD is 0.30 and the signal is 0.10, the bar value is 0.20.
As shown below, the MACD can still be greater than 0 even if the bars are shrinking. A decrease in the bars is different from the stock price having already fallen.
| Point in time | MACD | Signal | Difference |
|---|---|---|---|
| A | 0.30 | 0.10 | 0.20 |
| Me | 0.32 | 0.20 | 0.12 |
| All | 0.31 | 0.25 | 0.06 |
Do not draw conclusions based solely on a crossover.
If the price fluctuates within a similar range, the two lines may cross frequently. Do not interpret this as the start of a major trend every time; check the actual price as well.
The MACD is affected by the price unit. It is difficult to choose a stronger stock by looking only at the MACD numbers of a 1 KRW stock and a 100 KRW stock. Observe the changes in the same stock first.
You should not make such assumptions
“If the histogram shrinks, is it already in a downward trend?”
This means the gap between the two lines has narrowed. You must check separately whether the actual stock price has fallen.
Check what you have read.
- Have you distinguished between the MACD line and the signal line?
- Do you understand that the bars represent the difference between the two lines?
- Did you compare the MACD values of stocks with different price levels directly?
Apply what you read to the actual screen
Try it on WAPE
Source and scope of verification
Reviewed · Version 2
- MACDNew window
Fidelity Investments · Verify 2026-10-20
Default settings for 12/26/9 and repeated crossovers during consolidation. - Exponential Moving AverageNew window
Fidelity Investments · Verify 2026-10-20
An average that assigns greater weight to recent prices.
This is educational material for observation and information comprehension. Hypothetical examples do not represent actual stocks or performance and do not provide buy or sell recommendations.