Histogram confirmation and a second-series veto for MACD-family alerts

The archive treats the macdMomentumOscillator as a leading warning, the macdHistogram as confirmation, and a defined alert as occurring only when the histogram crosses zero in the same direction already indicated by the oscillator. Daily zero-line events are then read against the weekly histogram and momentum state, and at least one additional series is required before a trend change is accepted.

Three MACD-family series

The classic macdLine is the difference between two exponential moving averages of price, commonly a 12-period and a 26-period pair. The triggerLine is commonly a 9-period exponential average of that line. A cross of the two lines is treated as a potential trend-change alert.

One macdHistogram construction uses a 10-period versus 20-period exponential pair for the macdLine, then plots the difference between that line and a 10-period exponential triggerLine.

The macdMomentumOscillator is formed by subtracting the current histogram value from its value 10 periods earlier and smoothing that difference with a three-period simple moving average. Both series are read above and below their own zero lines.

When a warning becomes an alert

The macdMomentumOscillator is treated as a leading warning and the macdHistogram as confirmation. A defined alert occurs only as zeroLineConfirmation: the histogram crosses its zero line in the same direction already indicated by the momentum oscillator.

Weekly reading order

On weekly charts, reading order is oscillator direction first, then zero-line crosses, then overbought or oversold extremes versus the histogram. A four-to-six-month oscillator divergence is treated as a possible major trend-change warning, with histogram confirmation expected within two to five weeks.

Weekly-to-daily handoff

On daily charts, weeklyToDailyHandoff comes first. The weekly histogram and momentum state classify the intermediate trend, and daily events are read in that direction. A daily momentum zero-line cross is expected to be confirmed by the histogram within two to five days. Four-to-eight-week daily divergences are treated as possible trend-change warnings.

histogramPriority applies when weekly momentum is falling while the weekly histogram remains above zero and still rising. In that case the histogram is given more weight.

A daily zero-line event that is not matched by weekly histogram and momentum positions on the same side of zero is classified as a countertrend rebound rather than an intermediate trend change.

The second-series veto

The macdMomentumOscillator is described as producing false alerts. At least one additional series is required before a trend change is accepted. That secondSeriesVeto can be a suggested retest of the entry area, or confirmation from on-balance volume, Bollinger Bands, or the regular MACD.

Regular MACD and Bollinger Bands were used as a second confirmation layer so that repeated histogram and momentum zero-line flips could be set aside while regular MACD stayed above zero and price remained above the lower and middle bands.

On-balance volume was used as an independent confirmation series. Momentum-oscillator long alerts while on-balance volume stayed below its zero line were treated as countertrend rallies. A potential reversal was flagged only when both the oscillator and on-balance volume showed matching bullish divergence.