InvestorQ : Can you show me how to calculate the MACD and how to interpret it?
rhea Babu made post

Can you show me how to calculate the MACD and how to interpret it?

Answer
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1 year ago


Remember that MACD is an approximation and not a precise value. For example, an approximated MACD can be calculated by subtracting the value of a 26 period Exponential Moving Average (EMA) from a 12 period EMA. The shorter EMA is constantly converging toward, and diverging away from, the longer EMA. This causes MACD to oscillate around the zero level. A signal line is created with a 9 period EMA of the MACD line. Crossovers are used to take buy and sell decisions as well as the turnaround decisions are taken based on the intensity of the turnaround from higher or lower levels. The table below shows the calculation of the MACD and the MACD signals.

CLOSE

VOLUME

DATE_TIME

SMA-20

SMA

BB-Upper

BB-Lower

EMA

MACD

MACD-Signal

164.92

1023

03-Sep

164.92

0.000

0.000

164.92

748

04-Sep

Variable Name

Value

164.92

0.000

0.000

165.2

1066

05-Sep

PERIOD

14.00

164.96

0.022

0.004

165.07

3854

06-Sep

Std Deviation

2.00

164.97

0.029

0.009

165.2

10142

07-Sep

MACD Fast

12.00

165.00

0.045

0.016

165.26

141914

08-Sep

MACD Slow

26.00

165.04

0.061

0.025

165.07

174385

09-Sep

MACD Signal

9.00

165.04

0.058

0.032

164.41

163463

10-Sep

RSI period

14.00

164.96

0.002

0.026

163.98

122857

11-Sep

164.83

-0.076

0.006

163.81

112605

12-Sep

164.69

-0.149

-0.025

164.09

129824

13-Sep

164.61

-0.183

-0.057

164.37

232717

14-Sep

164.58

-0.185

-0.083

164.44

220827

15-Sep

152.91

153.93

151.89

164.56

-0.179

-0.102

164.4

1387

16-Sep

164.65

165.64

163.66

164.54

-0.176

-0.117

164.34

327

17-Sep

164.61

165.60

163.62

164.51

-0.175

-0.128

164.35

109

18-Sep

164.57

165.55

163.59

164.49

-0.173

-0.137

164.35

187

19-Sep

164.51

165.43

163.59

164.47

-0.168

-0.143

164.29

383

20-Sep

164.45

165.32

163.59

164.45

-0.168

-0.148

164.44

325

21-Sep

164.40

165.15

163.65

164.45

-0.154

-0.149

164.4

1425

22-Sep

164.57

164.34

164.90

163.77

164.44

-0.144

-0.148

164.28

9045

23-Sep

164.53

164.28

164.66

163.90

164.42

-0.144

-0.148

164.85

125968

24-Sep

164.53

164.31

164.80

163.83

164.48

-0.098

-0.138

165.33

137483

25-Sep

164.54

164.41

165.10

163.72

164.59

-0.021

-0.114

165.9

123085

26-Sep

164.58

164.56

165.54

163.58

164.76

0.084

-0.075

165.83

70326

27-Sep

164.61

164.68

165.83

163.54

164.91

0.160

-0.028

165.77

63383

28-Sep

164.64

164.78

166.05

163.52

165.02

0.213

0.020

165.88

81577

29-Sep

164.68

164.89

166.26

163.51

165.14

0.261

0.068

165.76

220271

30-Sep

164.74

164.98

166.40

163.56

165.22

0.286

0.112

166.02

62195

01-Oct

164.85

165.10

166.57

163.64

165.33

0.323

0.154

166.05

1208

02-Oct

164.96

165.23

166.71

163.74

165.42

0.350

0.193

166.01

1026

03-Oct

165.05

165.34

166.79

163.90

165.50

0.365

0.228

166.04

477

04-Oct

165.14

165.47

166.82

164.12

165.57

0.374

0.257

165.88

281

05-Oct

165.21

165.57

166.80

164.34

165.61

0.365

0.279

165.77

607

06-Oct

165.28

165.67

166.70

164.64

165.63

0.345

0.292

165.94

416

07-Oct

165.36

165.79

166.44

165.14

165.68

0.338

0.301

165.84

2135

08-Oct

165.43

165.86

166.22

165.49

165.70

0.321

0.305

165.98

6097

09-Oct

165.51

165.91

166.11

165.70

165.74

0.316

0.307

166.31

113836

10-Oct

165.61

165.93

166.23

165.64

165.81

0.334

0.313

165.89

127052

11-Oct

165.69

165.94

166.23

165.64

165.82

0.311

0.312

166.15

62970

12-Oct

165.77

165.97

166.26

165.67

165.87

0.310

0.312

166.03

41628

13-Oct

165.86

165.98

166.27

165.68

165.89

0.297

0.309

165.98

46387

14-Oct

165.92

165.99

166.26

165.72

165.90

0.278

0.303

166.17

43960

15-Oct

165.96

166.00

166.29

165.72

165.94

0.276

0.297

165.92

104685

16-Oct

165.96

165.99

166.28

165.71

165.93

0.251

0.288

165.85

28367

17-Oct

165.96

165.98

166.28

165.69

165.92

0.224

0.275

165.84

2937

18-Oct

165.97

165.97

166.27

165.67

165.91

0.198

0.260

165.95

1256

19-Oct

165.97

165.97

166.27

165.67

165.92

0.185

0.245

165.98

159

20-Oct

165.98

165.99

166.26

165.71

165.93

0.175

0.231

165.96

66

21-Oct

165.98

165.99

166.26

165.72

165.93

0.163

0.217

165.86

59

22-Oct

165.97

165.99

166.26

165.72

165.92

0.145

0.203

165.92

128

23-Oct

165.96

165.99

166.26

165.71

165.92

0.133

0.189

166.22

1400

24-Oct

165.97

165.98

166.22

165.74

165.96

0.146

0.180

166.83

49527

25-Oct

166.02

166.05

166.56

165.54

166.08

0.204

0.185

165.18

317272

26-Oct

165.99

165.98

166.66

165.29

165.96

0.115

0.171

166.27

340158

27-Oct

166.01

166.00

166.70

165.29

166.00

0.131

0.163

166.53

147176

28-Oct

166.04

166.03

166.79

165.28

166.07

0.162

0.163

166.39

79122

29-Oct

166.06

166.05

166.83

165.27

166.11

0.174

0.165

166.8

81435

30-Oct

166.09

166.11

166.98

165.24

166.20

0.214

0.175

166.66

87030

31-Oct

166.12

166.17

167.07

165.27

166.26

0.232

0.186

These calculations are made on a sample set that is based on certain assumptions. The MACD can be calculated by tweaking different levels of moving average days. But as a broad indicator of trends and turnarounds, the MACD is immensely useful.