What is MACD?

How it is worked out

MACD is built on two exponential moving averages of the closing price, one over 12 days and one over 26. The gap between them is the MACD line. A nine-day average of that gap is the signal line. The lesson on moving averages explains what an exponential average is.

Here are the numbers for Microsoft when the stock closed at $530.61 on Nov 6, 2026.

Gerald Appel developed the measure in the late 1970s. The settings 12, 26 and 9 are the usual ones, but they can be changed.

How to read the lines

Over or under zero. Over zero, the fast average sits above the slow one, so the price has lately been higher than before.

Over or under the signal line. Over the signal line, MACD has been rising lately. This is the cross most people talk about.

MACD is measured in dollars, not percent. A reading of 4.38 means something different on a $100 stock and a $1,000 stock, so two companies can't be compared directly. RSI doesn't have that problem, because it always sits between 0 and 100.

How often do the lines cross?

Often. The middle of the 20 largest US companies had 20 crosses a year since 2000, in both directions. After MACD crossed over its signal line, it was back under within a month in 82% of cases.

What happened after the crosses?

This is the same test as in the lesson on RSI: every cross, at most one a month per company, against the same company's ordinary day. The study on technical analysis runs the same test on more signals.

The differences in average rise can't be told apart from chance, after one, three or twelve months. That holds both ways: after MACD crossed under its signal line, the stock had risen in 65.1% of cases.

These are today's largest companies, so they recovered from every fall. That is why stocks have risen so often from almost any starting point.

What the number says, and what it doesn't

MACD uses only the price, so it holds nothing the price hasn't already shown. The lines also lag the price, because they are averages of averages. The number says nothing about why a price moves. See the course on why stocks move.

More numbers are on the Microsoft stock page.

Sources

• StockCharts ChartSchool, MACD: who developed it and the calculation, read on 5 November 2026.