MACD HISTOGRAM

So I am checking out this website on technical analysis using trendlines. I am glad I checked it out. It is very good about pointing out areas of support and resistance and how to draw proper trendlines.

On thing that I really noticed and the lecturer kept talking about was the "m-M-m" as seen on a MACD Histogram. When the MACDH is above the zero line, the m-M-m is and obvious 1st day peak lower than the second day peak, then the third day is lower than the second day which makes an "m-M-m". When drawn with trendlines it hints at signs of turning points. Thus, this could be obvious signs of areas to move with the trend or to take profits.

If you look at the chart (click on it to enlarge it) of the forex pair USD/CAD, you will see quite a few areas that the MACDH "m-M-m" move works or is an early signal to get in on the trend or take profits. There are a lot of trendlines on the chart but I want this to show me signs of where the MACDH confirms the support and resistance trendlines.

Look at 3/31/09. You will notice that the fx pair created the ultimate m-M-m where the MACDH produced the m-M-m (marked by the circle on the MACD section of the chart) at 1.2200 and the currency pair retraced back up to 1.2714 on 4/1/2009. There was no way of me knowing that 1.2714 was going to be the pivot point. When you look at the MACDH, you can see that the zero line was never reached and pair began to head back down and entered a downtrend.

On 4/16/2009, the MACDH hit a new low and on 4/17, another m-M-m showed its head and the USD/CAD pair created another perfect pivot point. This is now the support line for any further move down in the downtrend.

So now you have the highest high on 3/9/2009 and draw a trend line from that high to the next lower high on 4/1/2009 and this will be the resistance line in the downtrend.

If you were to take a countertrend trade on 4/17/2009, one would make a target along the down-trendline from 3/9 to 4/1. Low and behold on 4/21/2009, one could see that this countertrend trade would have hit a target. The following day on 4/22, the MACDH created another m-M-m and this would be the perfect entry for a short on the USD/CAD pair.

Again and again, this chart shows that the USD/CAD met support or resistance as MACDH made an m-M-m. Thus, when these are visualized, it would be prudent to pay real close attention to trendlines for entries or taking profits.