This oscillator takes into account two exponential averages, and a third which acts on the first two. These stockings are called MACD by its initials in English (Moving Average converges Divergence) and Signal.The Signal line is the exponential average of the MACD line, and is used to try to determine a potential changes in the trend of the price of a currency pair in the short term. This oscillator is calculated by subtracting the moving average of 12 days for the price of a pair of currencies from its moving average of 26 days. The result is an indicator with values above or below zero. When the value of the MACD is above zero, is that the average of 12 days is greater than the average of 26 days. When this occurs the scenario is bullish because it shows that the current prices (average of 12 days) are higher than the above prices (average of 26 days). So there is a change of trend to the rise in prices. When the MACD is below zero, it means that the 12-day moving average is less than 26 days, which leads us to the conclusion opposite, i.e.
the most recent prices are lower than prices earlier or older and shows a change downward trend in the prices of currencies. In conclusion, the MACD line tells us how it evolves the price in the medium and long term, while the Signal line indicates the behavior of the MACD line in the very short term. The use of these two lines would be so: when the Signal line cutting line MACD from top to bottom this is a buying signal, when the Signal line cutting line MACD from bottom to top are facing a sale signal. This oscillator allows you to confirm that the trend will be bull or bassist. To conclude, we pointed out that oscillators as the RSI, Momentum or the crossing of averages, allow to detect a change in the trend with some degree of advance. The MACD has for its part the advantage of allowing confirm that the trend will have consistency in the medium and long term.