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