McClellan Histogram Analysis & McClellan Histogram Signals
The McClellan Histogram is a graphical representation of the McClellan Oscillator and its signal line. This difference between the two is plotted as a histogram.
This is an oscillator, the center line is the zero cross over mark which is used to generate buy and sell signals.
McClellan Histogram
Technical Analysis & Generating Signals
The Histogram is momentum indicator. Signals are generated using the center-line cross over method.
- Bullish signal- Above Zero
- Bearish Signal - Below Zero
There are two fundamental techniques for using this indicator to generate signals.
Zero-Level Crossover- When the histogram crosses above the zero a buy signal is generated. Otherwise, when the histogram oscillator crosses below zero a sell signal is generated.
Technical Analysis in FX Trading
Divergence Trading - divergence between this indicator & the price chart can prove to be very effective Forex strategy in spotting potential trend reversal signals and trend continuation signals.
There are several types of Divergence Signals:
Trend Reversal Signals - Classic Divergence Signals
- Classic Bullish Divergence Signals - Lower lows on price chart and higher lows in the McClellan Histogram
- Classic Bearish Divergence Signals - Higher highs on price chart and lower highs in the McClellan Histogram
Trend Continuation Signals - Hidden Divergence Signal
- Hidden Bullish Divergence Signals- Lower lows in McClellan Histogram and higher lows in price chart
- Hidden Bearish Divergence Signals- Higher highs in McClellan Histogram and lower highs in price chart
To Learn more about divergence navigate to the divergence topic on this web site
