The MACD is calculated by subtracting a 26-day moving average of a security's price from a 12-day moving average of its price. The result is an indicator that oscillates above and below zero. When the MACD is above zero, it means the 12-day moving average is higher than the 26-day moving average. This is bullish as it shows that current expectations (i.e., the 12-day moving average) are more bullish than previous expectations (i.e., the 26-day average). This implies a bullish, or upward, shift in the supply/demand lines. When the MACD falls below zero, it means that the 12-day moving average is less than the 26-day moving average, implying a bearish shift in the supply/demand lines.

The MACD's trigger (which is a 9-day exponential moving average of the MACD indicator) can be calculated as shown below:

mov(macd(), 9,E)

"Buy" arrows were drawn when the MACD rose above its signal line; "sell" arrows were drawn when the MACD fell below its signal line as shown in the figure.

Let's consider the rational behind this technique. The MACD is the difference between two moving averages of price. When the shorter term moving average rises above the longer term moving average (i.e., the MACD rises above zero), it means that investor expectations are becoming more bullish (i.e., there has been an upward shift in the supply/demand lines). By plotting a 9-day moving average of the MACD, we can see the changing of expectations (i.e., the shifting of the supply/demand lines) as they occur.