The MACD indicator predicts the price movement by analyzing the smoothed difference of the convergence/divergence of two moving averages.
In simple terms, the MACD is the result of the simultaneous market analysis by two different moving averages.
The indicator was initially developed for a moderately volatile stock market. It is now used to estimate and forecast price fluctuations. Stock traders still apply the MACD to make investment decisions. The MACD values are displayed in a separate window, which is usually above or under the price chart.