MACD Histogram [MACDHist]

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The MACD Histogram function calculates the difference between the MACD (Moving Average Convergence / Divergence) and its signal line. Parameters ------------------ Data               The data to use in the calculation. This is typically a field in a data series or a calculated value. The periods of the moving averages used in the MACD are fixed by definition. To experiment with variations of the MACD, you may want to try one of the Value Oscillator indicators. Function Value ------------------------ The MACD (Moving Average Convergence/Divergence) is calculated by subtracting the value of a 26-day exponential moving average from the value of a 12-day exponential moving average. Its signal line is a 9-day exponential moving average of its value. The value of the MACD at the beginning of a data series is considered to be zero. Since the MACD uses exponential moving averages, its initial values will include the zero value in its calculation. Therefore, you may want to ignore values before the 26th value, when the effect on the longer moving average is no longer significant. Usage ----------- The MACD is a specific instance of a Value Oscillator and is typically used on the closing price of a security to detect price trends. When the MACD is increasing, prices are trending higher. When the MACD is decreasing, prices are trending lower. The MACD is traditionally traded against a 9-day exponential average of its value, called its signal line. The MACD Signal Line function is provided to generate this value. When the MACD increases above its signal line, a buy signal is generated. When the MACD decreases below its signal line, a sell signal is generated. See the sample entry/exit systems for examples using the MACD. See the sample entry/exit systems for examples of using the MACD in an entry/exit system. Source ------------ The MACD indicator is based on entries in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by Gerald Appel.