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2006issue C091-5

Treat a sideways Wave as permission before a breakout

A flat Wave is the cue to assemble support and resistance into a pattern. The momentum setup stays idle until price pierces a level and the MACD histogram agrees with that direction.

  • A flat, sideways Wave is the cue to draw trendlines and support-resistance and to look for congestion or consolidation.
  • Triangle and rectangle patterns are reserved for sideways cycles identified by the Wave. They are not applied during mark-up or mark-down.
  • A momentum setup stays direction-neutral until a price trigger. MACD confirmation is then an on/off check that agrees with the break, not a standalone timer.
  • Exits are planned from the same significant support or resistance that defines when the trade idea is no longer valid.
Entries in this reading3 entries
Current trackMACD115 readingsSupport and resistance170 readingsBreakout confirmation172 readings

Start with the Wave, not the named shape

The Wave is a three-line 34-period exponential moving-average band plotted on high, close, and low. It is used to judge trend presence, trend strength, and the absence of trend.

Editorial reading: treat a sideways Wave as a permission filter. Confirm the non-trend first. Only then assemble support and resistance into a pattern, and only then require a price break plus MACD agreement before treating the idea as live.

Assemble the pattern from lines already drawn

A flat, sideways Wave is the cue to draw trendlines and support-resistance and to look for congestion or consolidation patterns. Those lines are the building blocks. A triangle or rectangle may later be recognized from them rather than hunted as a named shape first.

Congestion is a wider, more volatile sideways range with looser support and resistance. Consolidation is a narrower range with firmer levels. Accumulation is that narrower sideways cycle, treated as consolidation. Distribution is the wider, more erratic sideways cycle, treated as congestion.

Four named market cycles are used before entry: accumulation, distribution, mark-up, and mark-down. Triangle and rectangle patterns are reserved for sideways cycles identified by the Wave. They are not applied during mark-up or mark-down.

Wait for a price trigger, then check MACD

A momentum setup is a no-direction-bias plan to trade a breakout or breakdown from a sideways pattern after a price trigger and confirmation. It stays direction-neutral until price pierces the pattern's support or resistance. The price trigger is a close or pierce through that level, and it must occur before confirmation is checked.

After a support break, a MACD histogram below zero is used as an on/off confirmation to accept a short, not as a standalone timing tool. MACD confirmation is an on/off histogram reading above or below zero used only to agree with the breakout direction, not to predict it.

The illustrated sequence is Wave identification, line-and-level drawing only when the Wave is sideways, a price pierce of the pattern, then MACD histogram confirmation.

Use the same levels for invalidation and exit

Exits are planned from significant support or resistance, using the same levels that define when the trade idea is no longer valid.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
39 of 80 in the MACD track
20071-4 pp.Next on MACDMACD with a Stochastic oscillator for spotting trend reversalsA slower MACD can stay bearish after an early top even while price chops sideways, so the crossover can be treated as a durable end-of-uptrend hypothesis rather than a one-bar trigger.
All readings on this track · 80 readings
  1. 1988Rebuild MACD-Mo and MACD-H before treating them as signals
  2. 1989Four-span MACD lookbacks as perishable parameters
  3. 1989Weekly then daily MACD confirmation on individual stocks
  4. 1991Regime-gated MACD and stochastic rules inside a checklist
  5. 1991Constructing MACD signal lines and divergence tests
  6. 1991MACD parameter order and cycle phase lag
  7. 1992Lengthened bond MACD as an equity regime filter
  8. 1992Long-horizon MACD construction from paired exponential averages
  9. 1993Constructing a signed ten-point trend filter
  10. 1994Constructing lag-reduced double exponential averages for MACD
  11. 1994Seeding DEMA2 filters to build a MACD signal
  12. 1994Constructing MACD from lag-reduced exponential averages
  13. 1994TEMA1 from nested exponential averages, then a two-horizon MACD
  14. 1994Constructing entry and exit on a relative-strength MACD
  15. 1994Constructing a relative-strength MACD crossover spreadsheet
  16. 1995Consensus presignal filters for Relative Strength Index, MACD and the Stochastic oscillator
  17. 1997Confirm the MACD turn with price, then exit on the histogram
  18. 1997Reconstructing a stochastic oscillator, MACD, and a triple-smoothed oscillator
  19. 1997Moving-average windows before crossovers and MACD
  20. 1999Second-stage MACD on relative-strength inputs
  21. 1999Constructing MACD from exponential-average spreads for crossover and divergence
  22. 1999Coding candlesticks into numeric indicators
  23. 2001Second-low confirmation with a percentage oscillator and money-flow filter
  24. 2001Constructing MACD from exponential average spreads and a signal line
  25. 2002Separate bounded and trend-following oscillator rules
  26. 2002Sort the regime before assigning MACD and stochastic jobs
  27. 2002Building classic divergence filters from RSI and MACD
  28. 2002Weekly highs and lows as trend gates
  29. 2002Constructing channel-normalized Fisher reversal signals
  30. 2002Affine-price and the Fisher transform as a constructed companion to MACD
  31. 2003Regularized EMA construction with a MACD line and a thrust oscillator
  32. 2003Curvature-penalized exponential averages versus MACD
  33. 2003MACD, moving averages, and a trend filter as one timing system
  34. 2003Fractional MACD and linear-regression reversal construction
  35. 2004Weekly MACD-histogram timing of bear-market rallies
  36. 2004Candlestick triggers filtered by MACD divergence
  37. 2004Staging energy-complex tops with trendline, breakout, and MACD
  38. 2005Selling climax holds versus fails
  39. 2006Treat a sideways Wave as permission before a breakout
  40. 2007MACD with a Stochastic oscillator for spotting trend reversals
  41. 2007Rebuilding an S&P 500 fifth-wave count after a broken target
  42. 2007Constructing MACD, RSI, and stochastic confirmation for futures
  43. 2007MACD histogram divergence needs a confirming close
  44. 2007Write the plan as a stack: ratio, boundary, then oscillators
  45. 2008MACD divergence and Stochastic oscillator confirmation on lumber futures
  46. 2008Assign confirmation, timing, and a stop before a currency pair is tested
  47. 2008Confirm the ten-bagger launch path before the MACD exit
  48. 2008Reading the offloaded evidence file
  49. 2008A Leader companion for MACD direction warnings
  50. 2008Relative strength exits with MACD averages and RSI
  51. 2008Assign one job per indicator in a three-screens rule set
  52. 2008Sequencing RSI, MACD, and average crossovers
  53. 2010Constructing the Schaff Trend Cycle from MACD and a dominant-cycle window
  54. 2010Schaff Trend Cycle as a MACD and Stochastic oscillator combination
  55. 2010Combining Relative Strength Index, the stochastic oscillator, and MACD as slope filters
  56. 2010Short-term wave and ratio clues without direction calls
  57. 2010A precise pullback entry and an unplanned profit-protection exit
  58. 2010Filtering MACD false signals with trendline breaks
  59. 2011Vendor feeds as an input variable in a MACD evaluation
  60. 2012Out-of-the-money versus in-the-money option sensitivity to implied volatility
  61. 2012MACD window tuning as hold-time control
  62. 2012Combining a moving-average crossover with MACD and support-resistance
  63. 2012Testing a published MACD entry with a histogram and signal-line agreement filter
  64. 2012Treat sample systems as a lab before live rules
  65. 2013Constructing moving averages and MACD from one price series
  66. 2013The next-bar price that forces a MACD signal-line cross
  67. 2013Constructing next-bar MACD reversal prices
  68. 2013Constructing inverted MACD reversal prices
  69. 2014Shared-filter combinations of the stochastic oscillator, MACD, and RSI
  70. 2014Square-root lookbacks for combined MACD and RSI
  71. 2015Audit open interest and trend before trusting oscillator crossovers
  72. 2016MACD without a signal line, confirmed by moving-average trend filters
  73. 2016Use RSI, MACD, and a moving average as a market-health consensus
  74. 2016MACD line versus histogram is a display problem first
  75. 2017Weekly and daily MACD on a single daily chart
  76. 2017Weekly and daily MACD as a stacked momentum filter
  77. 2017Nested weekly and daily MACD from paired EMA spreads
  78. 2018Weekly and daily PPO scale versus MACD, with bounded RSI and stochastic readings
  79. 2018Constructing a weekly and daily percentage price oscillator
  80. 2020Constructing Wyckoff tape reading with MACD, moving-average, and RSI filters
By fieldChart patterns222 readingsBy year200683 readings
All 115 readings tagged MACD
Also on MACD5 readings
2002Weekly highs and lows as trend gates2012Combining a moving-average crossover with MACD and support-resistance2004Staging energy-complex tops with trendline, breakout, and MACD2005When flag-and-pennant breakout scans fail a measurement audit1982Constructing a funnel from converging support and resistanceSupport and resistance