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Momentum and rotation
Does a MACD cross up say that price is cheap, or that momentum has turned?
MACD crossover
What it bets
The difference between two averages has gone from shrinking to expanding, and the direction has turned.
How the rule is written
Gerald Appel's MACD is a fast average minus a slow average. The signal line is an average of that difference. The difference crossing above the signal line leans long. Crossing below leans short. The histogram is the distance between the difference and the signal line. MACD does not say whether price is expensive relative to the high-low range.
When it fails
Crosses back and forth near the zero line get very dense in a sideways market. A cross far from the zero line may only be one slowdown inside a trend.
Do not confuse it with
A dual moving average asks whether the averages of price have crossed. MACD watches a difference that has already been calculated. RSI is bounded from 0 to 100. MACD has no overbought ceiling.