MACD Indicator - The theory does not work in practice. Please explain

Beginner Questions
1

Question:
In trying to plan my strategy I am testing the MACD indicator.
I included the default MACD indicator on my chart (EUR/USD, Close 12,26,9)
I also plotted the 12 and 26 EMA on my chart. (also using the close of period prices)
Visually when I look at the EMA’s plotted and see them moving further apart,
I expect the MACD line (redline) to rise; since it should be calculating the difference between the two EMA’s.
I see the opposite. The MACD line is falling.
Please explain why this is happening. What am I missing?

I have a screenshot to visualized my concern but am unable to upload it to this forum. If you need to see it I can email it to you.

2

if i recall, MACD isn’t just a difference between two running averages. rather, i think it’s the difference between averages of averages. yes, cascaded. a few online explanations actually do point that out that it’s an average of an average.

3

just read the [B]school of pipsology[/B] bout MACD. We will get the answer :slight_smile: