MACD is the abbreviation for "Moving Average Convergence Divergence". The basic purpose of a forex strategy based on MACD is to identify when one trend ends and another begins.

Just like the momentum indicator, MACD appears in the main chart below. It consists of three components: the MACD line, the signal line and the histogram.

The MACD is a momentum indicator that shows the difference between the two trend following indicators and the moving averages. As the two moving averages converge and move away from each other, forex traders' lines can be used to identify buy and sell signals for currencies. In addition, this indicator can also be used for other markets such as commodities and equities.