What is Histogram?
The difference between the MACD line and the signal line, displayed as vertical bars that show momentum strength.
Think of it like this
Like a speedometer for momentum - the taller the bar, the stronger the trend; shrinking bars warn of a potential reversal.
Formula
MACD Histogram = MACD Line - Signal Line- MACD Line: 12-day EMA - 26-day EMA
- Signal Line: 9-day EMA of MACD
- Histogram: Visual representation of the difference
Why it matters
- Shows momentum strength visually
- Identifies trend changes before crossovers
- Growing histogram = strengthening trend
- Shrinking histogram = weakening trend, potential reversal
What's a good value?
Positive & Growing
Strong Bullish
Uptrend strengthening
Positive & Shrinking
Weakening Bull
Uptrend losing steam
Negative & Growing
Strong Bearish
Downtrend strengthening
Negative & Shrinking
Weakening Bear
Downtrend losing steam, possible reversal
Real-world example
When histogram bars start shrinking while still positive, it warns that the uptrend is losing momentum - time to tighten stops.
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