Discussion in 'Technical Analysis' started by myminitrading, May 18, 2007.
How come the histogram ticks down when the price is rising?
Its a rate of change indicator. Difference between moving averages. Difference can get smaller and histogram will step against price.
Think of it as waning momentum and all will become clear
I was thinking that with the futures ramping up overnight and the Index zooming up at the open, and just trading in a range might cause this.
Basically the short term average jumps ahead of the longer term one when the underlying makes a strong move higher. As the price keeps rising the slower longer term moving average starts processing the data as well and starts moving up at a sharper incline and the gap between the shorter and longer term MAs narrows.
When the 2 averages converge, MAC starts to change direction.
Add the MACD to your chart and compare it with the MACD Histogram and you'll see. The histogram is just the distance between the two MACD lines.
fortunately, the histogram expands again.
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