Moving Average Convergence/Divergence, or MACD for short, is a trend-following indicator that looks at two different Exponential Moving Averages (EMAs) and makes connections between them and the price of the cryptocurrency. MACD is calculated by subtracting the 26-period EMA from the 12-period EMA and we are given a MACD line. But in most cases, we don’t need to make this calculation ourselves as the indicator does it and simply displays the MACD line to us.

When using the MACD we will be given either a positive or negative number, based on whether the 26-period EMA is greater than the 12-period EMA or not. Once MACD is calculated it will be displayed on a histogram, and not on top of the chart. A histogram is a special space below the chart where certain values are displayed, such as trading volume. Once we have our MACD displayed it's time to implement it in our crypto trading.

As we mentioned above, the MACD indicator is displayed as a line and is placed below the chart on a histogram. Along with this indicator, we need to introduce a signal line in the form of an additional EMA. There is no fixed value for this signal line, but it is universally acknowledged that a 9-day EMA is the best signal line. After we have these two set up, we need to watch their movements. If we see that the MACD line has gone over the signal line, it usually means that prices are going to go up, and it is best to enter long positions. But if we see that the MACD line falls below the signal line, then it signals a bearish trend, and prices are expected to fall. We also need to mention that MACD is a lagging indicator, meaning that the data it provides can be a little late and traders need to account for that when using this indicator. It is also advised to never trade with just one indicator, especially if it’s a lagging indicator. Traders should implement multiple tools into their trading activities and never be dependent on just one indicator providing all necessary information. 

To better understand how the MACD indicator works and how to use it when trading with cryptocurrencies, let’s take a look at an example. In this case, we are trading with the BTC/USD trading pair, using the MACD indicators, which is placed below the chart on the histogram. 

Looking at the chart, we can see that when the MACD line (blue line) first crossed the signal line (orange line) we saw a huge spike in value and prices increased drastically. But then BTC went into a volatile state and once the MACD crossed below the signal line, prices started to drop sharply, this drop was intensified when MACD crossed below the zero line, meaning that it went into negative numbers. But then we can see that the MACD line started to rise once again and so did prices, up until it fell below the signal line once again and prices started to drop.