Oscillator of a Moving Average OsMA ( MACD Histogram)

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Table of Contents:

  1. Introduction
  2. What is MACD Histogram?
  3. How to Calculate MACD Histogram?
  4. Interpretation of MACD Histogram
  5. Conclusion

Introduction

The MACD Histogram is a technical analysis tool that measures the difference between the MACD line and its signal line. It is used to identify changes in the momentum, strength, and direction of a stock’s price trend.

What is MACD Histogram?

MACD Histogram is calculated by subtracting the signal line from the MACD line. The MACD line is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The signal line is the 9-period exponential moving average of the MACD line.

How to Calculate MACD Histogram?

To calculate MACD Histogram, you need to follow these steps:

  1. Calculate the 12-period EMA and 26-period EMA.
  2. Subtract the 26-period EMA from the 12-period EMA to get the MACD line.
  3. Calculate the 9-period EMA of the MACD line to get the signal line.
  4. Subtract the signal line from the MACD line to get the MACD Histogram.

Interpretation of MACD Histogram

MACD Histogram is used to identify changes in the momentum, strength, and direction of a stock’s price trend. A rising MACD histogram indicates that the bullish momentum is increasing, while a falling MACD histogram indicates that the bearish momentum is increasing. A positive MACD histogram means that the MACD line is above the signal line, indicating a bullish signal, while a negative MACD histogram means that the MACD line is below the signal line, indicating a bearish signal.

Conclusion

The MACD Histogram is a useful tool for analyzing the trend and momentum of a stock’s price movement. By understanding how to calculate and interpret MACD Histogram, traders and investors can make better-informed decisions about when to buy or sell a particular stock.

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