Macd

Quick Reference

Property	Value
Dimension	technical
Category	technical
Version	v0.9.0 (Beta)
Output Column	macd

MACD: (ema(fast) - ema(slow)) - trend-following momentum indicator capturing the convergence/divergence of moving averages

Formula

ema((ema(price, fast_window) - ema(price, slow_window)), signal_window)

CDM Inputs

Column	CDM Table	Description
price	cdm_*	CDM source table

Parameters

Parameter	Type	Default	Description
fast_window	integer [2, 200]	12	Fast EMA window (typically 12)
slow_window	integer [5, 500]	26	Slow EMA window (typically 26)
signal_window	integer [2, 100]	9	Signal line EMA window (typically 9)

Output

Column: macd

MACD line (fast EMA minus slow EMA)

Market Intuition & Trading Rationale

MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator: ema(ema(price, fast) - ema(price, slow), signal). The inner difference (fast EMA minus slow EMA) is the MACD line — it's positive when the short-term trend is above the long-term trend (bullish) and negative when below (bearish). The outer EMA smooths the MACD line into a "signal line." Crossovers between the MACD line and signal line are traditional entry/exit triggers.

The formula compiles to a 3-node IR DAG: two EMA computations for the fast and slow moving averages, a subtraction to produce the MACD line, and a final EMA for the signal line. The default parameters (12/26/9) are the classic Gerald Appel settings, but the formula accepts any windows.

MACD is inherently trend-following — it performs best in sustained directional markets and worst in choppy, range-bound conditions. The gap between the MACD line and signal line (the histogram) measures trend strength: widening histogram = accelerating trend; narrowing histogram = decelerating trend, potential reversal.

Usage Cases

• MACD/signal crossover: MACD crosses above signal → bullish entry. MACD crosses below signal → bearish entry. This is the classic MACD strategy, best suited for daily and intraday swing trading.
• Zero-line crossover: MACD crossing above zero → long-term trend turning bullish. Below zero → bearish. More reliable than signal crossovers but slower to react.
• Divergence: Price makes a higher high but MACD makes a lower high → bearish divergence (trend weakening). Price makes a lower low but MACD makes a higher low → bullish divergence. These are leading reversal signals.

YAML Definition

name: macd
description: 'MACD: (ema(fast) - ema(slow)) - trend-following momentum indicator capturing
  the convergence/divergence of moving averages'
category: technical
version: v0.9.0 (Beta)
dimension: technical
status: Pre-release
required_inputs:
  - price
output_column: macd
output_description: MACD line (fast EMA minus slow EMA)
parameters:
  fast_window:
    type: integer
    description: Fast EMA window (typically 12)
    required: false
    default: 12
    constraints:
      min: 2
      max: 200
  slow_window:
    type: integer
    description: Slow EMA window (typically 26)
    required: false
    default: 26
    constraints:
      min: 5
      max: 500
  signal_window:
    type: integer
    description: Signal line EMA window (typically 9)
    required: false
    default: 9
    constraints:
      min: 2
      max: 100
formula: ema((ema(price, fast_window) - ema(price, slow_window)), signal_window)