"the two lines that are drawn are NOT moving aveages of the price. Instead, they are moving averages of the difference between two moving averages.
in our example above, the faster moving average is the moving average of the difference between the 12 and 26 period moving averages. the slower moving average plots the previous MACD line. Once again, from our example above, this would be a 9 period moving average."
I dont understand the part where it says 'the slower moving average plots the previous MACD line". doesnt the slower moving average just plot the difference between the 9 and 26 period moving averages? or is this saying the same thing?
thanks
John
The “fast” line is a moving average (MA) of the difference between the 12 and 26 EMAs, whereas the “slow” line is a MA of the fast line, usually a 9 EMA of the fast line.
In other words the slow line is constructed from the fast line.
The babypips school tends to give you a flavour of all the indicators etc. To put more meat on the bones & for a more precise interpretation of each try “googling” stockcharts MACD & follow the link.