The Moving Average Convergence Divergence (MACD) indicator measures the distance between two exponential moving averages (EMAs). The zero line represents the exact boundary where that distance collapses to zero.
Traders typically use a 12-day EMA and a 26-day EMA.
When the EMAs intersect, the MACD line is exactly zero. A moving-average crossover and a MACD zero-line crossover are the same mathematical event.
Above Zero Line
The 12-day EMA trades above the 26-day EMA, confirming short-term momentum is stronger than medium-term momentum.
These stretches usually last longer.
Green days are a bit more common and daily returns are higher.
Below Zero Line
The 12-day EMA trades below the 26-day EMA, confirming short-term momentum is weaker than medium-term momentum.
These stretches are usually shorter.
Volatility is usually higher and green days sit closer to even.
At Zero Line
Both averages intersect. A moving average crossover and a MACD zero-line crossover are the exact same mathematical event rendered in two different layouts.
Critical Distinction: Zero Line vs. Signal Line
Signal Line: A 9-day EMA of the MACD line itself. Signal line crosses measure short-term momentum acceleration.
Zero Line: The absolute baseline where MACD = 0. Zero line crosses signify trend shifts between the underlying 12-day and 26-day EMAs.
Tool Glossary
The Basics
Candle (OHLC)
One bar of price data: the open, high, low and close. This tool uses the close to compute MACD. The open, high and low do not go into the reading.
Session
One trading day. Time in this tool is measured in sessions rather than calendar days, so weekends and holidays are skipped.
The Patterns
Exponential Moving Average (EMA)
A moving average that weights recent bars more heavily than older ones, so it turns faster than a simple average of the same length. This tool uses a 12-day EMA and a 26-day EMA.
MACD
Moving Average Convergence Divergence: the distance between those two EMAs. Above zero the 12-day leads. Below zero it lags.
MACD Zero Line
The level where MACD equals zero. That is the same moment the 12-day EMA and the 26-day EMA are equal. The Crosses mode measures the session MACD moved through that line. The State mode measures sessions while MACD sits above or below it.
Signal Line
A 9-day EMA of the MACD line itself. A signal-line cross is a different event from a zero-line cross. This tool does not use the signal line.