Now that we understand the concept of the moving average, let’s take a look at a similar technique known as the “double crossover”.
In this technique, we use 2 moving averages. A faster and a slower one.
By faster, we mean a smaller period; by slower, we mean a longer/bigger period.

A popular combination is the 20 and 50 Exponential Moving Average.
The 20-period is the short-moving average, and the 50-period is the long one.
So, in the double crossover, a crossing of the moving averages triggers a change in the direction of the market, and as such, it triggers an entry or exit signal.
Let me be more specific and use examples in the MACD context.

MACD stands for Moving Average Convergence/Divergence, and it consists of 2 moving averages.
The 12 Exponential Moving Average and the 26-period EMA.
The difference between the 2 is what we call the MACD.

Now, pictorially, when the faster EMA crosses above, the slower EMA, it is assumed that the underlying financial instrument is rising.
Since the attached financial instrument is rising, it makes good sense to enter the market with a buy order and enjoy the rally.
Similarly, after the faster EMA crosses below, the slower EMA then the rising market comes to an end, signaling a change in the direction of the market, and it makes sense to exit the market and close the trade.
When the MACD crosses the 0 or equilibrium line upwards, then a rally is in place.
Similarly, when the MACD crosses downwards, the 0 line of decline is in place.
Of course, it is imperative to remember at all times that price is the BOSS.

In other words, MACD is an oscillator, and like any other oscillator, its crossing of the equilibrium confirms the price direction.
Now the second line, red by default, is the signal line and is actually a 9-period moving average of the MACD.
More precisely, it’s a 9-period Simple Moving Average of the MACD.
The crossing of the MACD and the Signal line may trigger faster entry and exit signals.
But the faster signals may also imply more false signals.

The crossing of the two lines meaning the MACD and the Signal line, is shown as a Histogram.
I’m referring to the red bars that move up and down the 0 lines.
Perhaps some traders would find it more eye-pleasing.

Now, before we wrap up, a word of warning.
MT4 and MT5 trading platforms display MACD as a Histogram instead of a line.
The Signal line, remember the 9-period simple moving average is present in all 3 platforms.
Oscillator analysis also refers to divergence and overbought and oversold levels, but I find these topics a bit advanced, and I will save them for later.