The concept behind the MACD is straightforward. It calculates the difference between a security’s 26-day and 12-day exponential moving averages (EMA). Each moving average uses the closing price of its period (26- and 12-day) to calculate its moving average value.
On the MACD chart, a nine-period EMA of the MACD itself is also plotted. This line is called the signal line. It acts as a trigger for buy and sell decisions when the MACD crosses over it. The MACD is considered the faster line because the points plotted move more than the signal line, which is regarded as the slower line.