MACD stands for Moving Average Convergence Divergence. It subtracts a 26-period Exponential Moving Average from a 12-period EMA, producing a line that oscillates above and below zero. A 9-period EMA of the MACD line itself — called the signal line — is plotted alongside it. The gap between the MACD line and its signal line is often shown as a histogram.
The two most-used signals are the crossover (MACD line crossing above or below the signal line) and the zero-line cross (MACD moving from negative to positive, or vice versa). Both are momentum signals: they fire when short-run price behaviour is accelerating relative to the longer run, not when a specific price level is reached.
MACD shares the strengths and weaknesses of all moving-average-based tools: it works well in trending markets and poorly in sideways, range-bound conditions. Divergence between the MACD histogram and price — particularly a series of declining histogram peaks while price is still rising — is one of its more reliable signals, though it requires patience and confirmation to act on responsibly.