About MACD (Moving Average Convergence Divergence)
What is MACD?
The MACD (Moving Average Convergence Divergence) is one of the most popular and widely-used technical analysis
indicators in trading. Developed by Gerald Appel in the late 1970s, MACD is a momentum oscillator that shows the relationship between
two exponential moving averages (EMAs) of a security's price. It helps traders identify potential trend changes, momentum shifts, and
buy/sell signals in financial markets.
How MACD Works
The MACD indicator consists of three main components:
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MACD Line (Blue): The difference between the 12-period EMA and the 26-period EMA. This is the core of the
indicator and represents the momentum of price movement.
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Signal Line (Orange): A 9-period EMA of the MACD line itself. This acts as a trigger for buy and sell signals
when the MACD line crosses above or below it.
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Histogram (Bars): The visual difference between the MACD line and the Signal line. Green bars indicate bullish
momentum (MACD above Signal), while red bars indicate bearish momentum (MACD below Signal).
Trading with MACD
Traders use MACD in several ways:
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Signal Line Crossovers: When the MACD line crosses above the Signal line, it generates a bullish signal.
Conversely, when it crosses below, it's a bearish signal.
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Zero Line Crossovers: When the MACD crosses above zero, it indicates bullish momentum. Below zero suggests
bearish momentum.
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Divergence: When price makes a new high but MACD doesn't (bearish divergence), or price makes a new low but MACD
doesn't (bullish divergence), it can signal a potential trend reversal.
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Histogram Analysis: Growing histogram bars indicate strengthening momentum, while shrinking bars suggest
weakening momentum.
MACD with QFChart & PineTS
This demo showcases a real-time MACD implementation using QFChart for visualization and PineTS for indicator
calculation. Here's what makes this implementation special:
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Live Streaming Data: Uses PineTS.stream() to fetch real-time market data from Binance every 3 seconds, providing
up-to-the-second MACD calculations.
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Incremental Updates: The MACD indicator is recalculated and updated in real-time without re-rendering the entire
chart, ensuring smooth performance.
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Separate Pane Display: The MACD is rendered in its own dedicated pane below the main price chart, making it easy
to analyze price action alongside momentum indicators.
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Interactive Features: The chart includes drawing tools (line, Fibonacci retracement, measure tool) and supports
zoom, pan, and collapse/maximize controls.
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Last Price Line: A dynamic horizontal line shows the current price with a countdown timer to the next candle
close, helping traders time their entries and exits.
Technical Implementation
PineTS handles the data fetching and MACD calculation using Pine Script v5 syntax, which is transpiled to JavaScript
at runtime. The indicator uses incremental calculation with state management, ensuring O(1) performance per bar update rather than
recalculating the entire history.
QFChart (built on Apache ECharts) renders the MACD in a separate pane with customizable height, automatically
handling Y-axis scaling, series data mapping, and real-time updates through the updateData() API.
Use Cases
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Day Trading: Monitor 1-minute or 5-minute charts with MACD to catch quick momentum shifts in crypto, forex, or
stock markets.
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Swing Trading: Use MACD on daily or 4-hour charts to identify medium-term trend changes and optimal entry/exit
points.
- Trend Confirmation: Combine MACD with price action to confirm breakouts, pullbacks, or trend continuations.
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Algorithmic Trading: Integrate this real-time MACD implementation into automated trading systems that react to
momentum signals.
Getting Started
To use this MACD implementation in your own project:
- Install QFChart:
npm install @quantforge/qfchart
- Install PineTS:
npm install @quantforge/pinets
- Create a chart container:
<div id="chart"></div>
- Initialize with PineTS streaming and add the MACD indicator as shown in this demo's source code
View the source code of this page to see the complete implementation. The demo uses Binance market data for BTC/USDT on the 1-minute
timeframe, but you can easily adapt it to any symbol or timeframe supported by your data provider.
Learn More
For more information about technical indicators, Pine Script, and advanced charting techniques: