MACD Histogram (H1, H2)

Crypto momentum changes using MACD Histogram.

altFINS has developed a proprietary indicator to detect early changes in crypto momentum (MACD): H1 and H2.

H1 means that MACD histogram is up in the last 1 interval (day). H2 means MACD histogram is up in the last 2 intervals (days).

MACD Signal Line crossovers are typically used to identify either bullish or bearish crypto momentum.

However, traders can use MACD Histogram to help anticipate such crypto signals.  Recall that a Signal Line crossover happens when a MACD Line crosses over a Signal Line (see “buy” and “sell” flags in Bitcoin chart below).  The difference between MACD Line and Signal Line is captured by MACD Histogram bars.  In essence, MACD Histogram is an indicator of indicators, and it is a step ahead of Signal Line crossover!

When the slope of the MACD Histogram changes, traders should take notice.  When MACD Histogram peaks and begins to decline (blue bars), that’s a potential sell signal to a trader and it would occur sooner than the “Sell” Signal Line crossover (see Bitcoin chart below).  And when MACD Histogram troughs and begins to rise (blue bars), that’s a potential buy signal.

These early changes in the slope of MACD Histogram are captured by our H1 and H2 indicators.

In the Bitcoin chart below, notice how the change in the slope (red vertical lines) would give traders an earlier trade signal than a MACD Signal Line crossover (grey vertical lines). 

That slight difference in timing could make a huge difference in profits!