MACD filter time constants of 12 and 26 days, the MACD derivative estimate is filtered approximately by the equivalent of a low-pass EMA filter of 38 days. The time derivative estimate (per day) is the MACD value divided by 14. The average series is also a derivative estimate, with an additional low-pass filter in tandem for further smoothing (and additional lag). The difference between the MACD series and the average series (the divergence series) represents a measure of the second derivative of price with respect to time ("acceleration" in technical stock analysis). This estimate has the additional lag of the signal filter and an additional gain factor equal to the signal filter constant. Classification The MACD can be classified as an absolute price oscillator (APO), because it deals with the actual prices of moving averages rather than percentage changes. A percentage price oscillator (PPO), on the other hand, computes the difference between two moving averages of price divided by the longer moving average value. While an APO will show greater levels for higher priced securities and smaller levels for lower priced securities, a PPO calculates changes relative to price. Subsequently, a PPO is preferred when: comparing oscillator values between different securities, especially those with substantially different prices; or comparing oscillator values for the same security at significantly different times, especially a security whose value has changed greatly. Another member of the price oscillator family is the detrended price oscillator (DPO), which ignores long term trends while emphasizing short term patterns. Trading interpretation Exponential moving averages highlight recent changes in a stock's price. By comparing EMAs of different lengths, the MACD series gauges changes in the trend of a stock. The difference between the MACD series and its average is claimed to reveal subtle shifts in the strength and direction of a stock's trend. It may be necessary to correlate the signals with the MACD to indicators like RSI power. Some traders attribute special significance to the MACD line crossing the signal line, or the MACD line crossing the zero axis. Significance is also attributed to disagreements between the MACD line or the difference line and the stock price (specifically, higher highs or lower lows on the price series that are not matched in the indicator series). Signal-line crossover A "signal-line crossover" occurs when the MACD and average lines cross; that is, when the divergence (the bar graph) changes sign. The