MACD indicator - page 62
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Macd histogram height
HELLO MLADEN, The rules mentioned above in post 611 are for UPSWINGS ( GREEN COLOR ). The rules for a DOWNSWING ( RED COLOR ) are the exact reverse of the upswing rules. THANKS FOR EVERYTHING.
Further description
HELLO MLADEN,
NAME ; MACD HISTOGRAM ( MAKING HIGHER HIGHS AND LOWER LOWS )
(1) An UPSWING BEGINS whenever the MACD Histogram (e.g MACD 1 - 20 - 1) crosses ABOVE the ZERO Line and the upswings ENDS once the Histogram reverses back BELOW the zero line.
(2) The FIRST BAR of an upswing is always the FIRST SIGNAL (showing GREEN COLOR)
(3) After this first bar (and first signal ),the 2nd signal must be a histo that gives a HIGHER HIGH than the 1st signal, while the 3rd signal must be a Histo bar that is HIGHER than the Histo bar of the 2nd signal etc.
(4) This rule will hold until the MACD HISTO reverses BELOW the zero line which marks the end of the upswing and also marks the beginning of the DOWNSWING.
I hope this is clearer,THANKS.
...
Let me see if I understand :
HELLO MLADEN,
NAME ; MACD HISTOGRAM ( MAKING HIGHER HIGHS AND LOWER LOWS )
(1) An UPSWING BEGINS whenever the MACD Histogram (e.g MACD 1 - 20 - 1) crosses ABOVE the ZERO Line and the upswings ENDS once the Histogram reverses back BELOW the zero line.
(2) The FIRST BAR of an upswing is always the FIRST SIGNAL (showing GREEN COLOR)
(3) After this first bar (and first signal ),the 2nd signal must be a histo that gives a HIGHER HIGH than the 1st signal, while the 3rd signal must be a Histo bar that is HIGHER than the Histo bar of the 2nd signal etc.
(4) This rule will hold until the MACD HISTO reverses BELOW the zero line which marks the end of the upswing and also marks the beginning of the DOWNSWING.
I hope this is clearer,THANKS.Macd histogram peaks ( within an upswing or downswing )
Yes you are very correct but there are 2 additional factors to be included in the signal rule.
FOR GREEN SIGNALS ;
(1) We are using the cross of the Histogram ABOVE the 0 line to determine the START of an UPSWING and the reverse cross of the Histogram BELOW the 0 line as the END of the upswing and START of a DOWNSWING.
(2) Therefore for a GREEN SIGNAL ;
(a) the MACD Histogram > 0
(b) the slope of Histogram is UP
(c) the HEIGHT (VALUE) of the Histogram MUST be HIGHER than the height (value) of the last GREEN Signal WITHIN THAT UPSWING.
(d)Once MACD is ABOVE the 0 line,every new GREEN BAR Signal must be a HIGHER HISTO BAR compared to ALL preceding GREEN BARS ( within that particular upswing ).
This is showing the initial "swings" when MACD histogram changes trend (crosses 0 line). As long as the values are rising or falling (depends on the direction of the trend) the color remains the same). As soon it stops rising or falling, it will nor show a new "initial swing" until the trend does not change. Is that what you had in mind?
PS: MACD signal line is calculated as EMA (the original Gerald Appel way) in this indicator
Yes you are very correct but there are 2 additional factors to be included in the signal rule.
FOR GREEN SIGNALS ;
(1) We are using the cross of the Histogram ABOVE the 0 line to determine the START of an UPSWING and the reverse cross of the Histogram BELOW the 0 line as the END of the upswing and START of a DOWNSWING.
(2) Therefore for a GREEN SIGNAL ;
(a) the MACD Histogram > 0
(b) the slope of Histogram is UP
(c) the HEIGHT (VALUE) of the Histogram MUST be HIGHER than the height (value) of the last GREEN Signal WITHIN THAT UPSWING.
(d)Once MACD is ABOVE the 0 line,every new GREEN BAR Signal must be a HIGHER HISTO BAR compared to ALL preceding GREEN BARS ( within that particular upswing ).Test
HELLO MLADEN, You got the concept right, just that there is presently a premature end of signals during an upswing (and also downswings )
As long as the MACD is ABOVE the 0 line,the UPSWING Is still on,and as such once there is a new bar with a HIGHER HEIGHT than the last Green bar of that upswing ( when MACD is ABOVE 0 ) this HIGHER bar would give a new GREEN SIGNAL. This rule will continue until the MACD reverses below the 0 line.
An UPSWING ( Crossover of fast EMA above slow EMA ) BEGINS once MACD histo crosses ABOVE the 0 line and it ENDS once the MACD reverses BELOW the 0 line.
THANK YOU so much for your time and Great work,its highly appreciated.
winner246
It seems that we are talking about different things. Here is a link where it is explained quite nicely what is MACD and what is usually called a "MACD histogram" MACD - Wikipedia, the free encyclopedia. Pasting just one picture from there here (since it is a good article there, worth reading)
Test
HELLO MLADEN, Can you simply use a RSI instead of MACD. The rules then will be ;
UPSWING ( OR UPTREND ) ; Once RSI Crosses ABOVE its LEVEL 50 this marks the start of an upswing and
this upswing ends once RSI reverses BELOW its LEVEL 50.
So in an upswing ;
(1) once the RSI is ABOVE its 0 line the FIRST bar ABOVE the 0 line would show GREEN as the 1st signal of that upswing;
(2) once the RSI attains a HIGHER LEVEL ABOVE the level of the 1st green signal, it would show a 2nd GREEN Signal
(3) once the RSI attains another HIGHER LEVEL ABOVE the level of the 2nd green signal, it would show a 3rd GREEN Signal
(4) this sequence will continue UNTIL the RSI reverses BELOW its 50 Level, which marks the END of that upswing ( or uptrend )
(5) Histogram bar design is still more suitable for this new indicator.
Sorry for the inconvenience
Some note on convergence signals
In his book ADXcellence, Dr. Charles b. Schaap stated in pages 114 and 115;
DMI CONFIRMATION AND NONCONFIRMATION
CONFIRMATION (CONVERGENCE) occurs when price and DMI agree. The focus is always on price,and the DMI lines are used to confirm price. Price never confirms an indicator.
DMI confirms price when price makes a new high and + DMI makes a new high; or when price makes a new low and - DMI makes a new high.
When price has confirmation, there are much higher odds of trend continuation. Confirmation on consolidation breakout trades will help the trader avoid traps and head fakes.
DMI BREAKOUT RULE (CONFIRMATION)
A valid breakout up requires a new high in price and a new high in + DMI ; a valid breakout down requires a new low in price and a new high in - DMI. Dr. Charles B. Schaap.
Not all indicators possess this attribute but i found it accurate on MACD HISTO and RSI.
Man, you really are jumping from subject to subject. Why not reading Welles Wilder first when it comes to DMI (after all he just invented it)?