MACD Histogram — Trading Wiki

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Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What MACD Histogram means

The MACD histogram represents the difference between the MACD line and signal line as vertical bars. It is calculated from past prices.

In depth

The MACD histogram is MACD minus its signal line. Under common defaults, MACD is a 12-period exponential average minus a 26-period average; the signal is a 9-period exponential average of MACD. A positive histogram means MACD exceeds the signal. Bars becoming less negative mean that difference is narrowing, not that the asset must rise. The histogram can change because either component changes. Interval, initialization and price data affect the calculation. TradeHQ does not display a MACD overlay, so calculate this example separately rather than treating the practice chart as indicator evidence.

Key points

• Measures the gap between MACD line and signal line
• Bars show MACD minus its signal line; a larger difference does not by itself measure price acceleration
• Histogram divergence describes historical observations, not a reversal forecast

Why it matters when you are learning

Reproduce the difference between a MACD line and its signal line before interpreting the bars. This describes calculated observations, not a reliable entry or exit time.

Worked exercise and its limits

Hypothetical MACD = 2.0 and signal = 1.5 give a histogram of 0.5. If MACD stays 2.0 and the signal rises to 1.8, the histogram shrinks to 0.2 without MACD becoming negative. TradeHQ has no MACD overlay.