What does the signal line of the MACD represent?

The signal line of the MACD (Moving Average Convergence Divergence) represents the 9-day Exponential Moving Average (EMA) of the MACD line itself. This line is critical in trading as it serves as a trigger for buy and sell signals. When the MACD line crosses above the signal line, it can indicate a bullish signal, while a crossover below the signal line can suggest a bearish signal.

In technical analysis, the combination of the MACD line and the signal line helps traders identify momentum shifts and potential reversals in a security's price direction. The use of a 9-day EMA for the signal line is a standard practice, as it allows for a responsive yet smooth depiction of the MACD's movements, making it easier for traders to gauge market trends.

The other options represent different moving averages related to the MACD calculation but do not correctly define the signal line. The 12-day and 26-day EMAs are used to calculate the MACD line itself, while the histogram illustrates the difference between the MACD line and the signal line, providing insights into the strength of momentum.