Histogram MACD

Histogram MACD is derived from the original MACD indicator, which simply quantify in a graphical way the crossing of two exponential moving averages.

It is visually more efficient to use the MACD instead of two simple MA, as crossings above or below the MACD 0 line are "sometimes" easier to spot than moving average crossings, especially when looking at the big picture.

The histogram MACD adds a third moving average that quantify the distance between the slow and fast moving average after the crossings, the result in displayed below.

The Histo MACD is not necessarly equal to 0 when the fast and slow moving average cross as due to the fact that the difference between the Fast and the Slow MA is smoothed through a third moving average, differences that occured after past crossings can build up or decrease this third moving average over the time.

Below information on how to interpret the Histogram MACD.

There are 4 main patterns for interpreting the Histogram MACD. As mentionned previously, one should not take investment decisions solely based on one signal only. The odds of making profit using the interpretations below is above 50%, but not too much above, such signals should be always confirmed with at least two other indicators. 

In this pattern the Histogram MACD tells us that price is likely to go further up, it is a bullish signal.

In this pattern the Histogram MACD tells us that price is likely to go further down, it is a bearish signal.

In this pattern the Histogram MACD tells us that price is likely to go further up despite the last candle indicates a weakness in the trend. Tt is still a bullish signal, but should be interpreted carefully.

In this pattern the Histogram MACD tells us that price is likely to go further down despite the last candle indicates a weakness in the trend. Tt is still a bearish signal, but should be interpreted carefully.

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