MACD Histogram Reversal
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Zero-Cross Based Momentum Switch Strategy
This strategy leverages the MACD histogram’s zero-line crossover to detect momentum reversals and enter trades in the early stages of directional shifts. By focusing purely on the histogram component rather than the MACD line itself, the system reacts to subtle changes in acceleration and deceleration of price momentum.
How It Works:
The MACD Histogram is calculated as the difference between the MACD line and the Signal line, derived from:
Fast EMA (default: 12-period)
Slow EMA (default: 26-period)
Signal Smoothing EMA (default: 9-period)
This setup helps identify not just trend direction, but momentum shifts, especially when the histogram crosses the zero line.
Entry Logic:
Long Entry:
Triggered when the histogram crosses above the zero line, suggesting bullish momentum is taking over.
Short Entry:
Triggered when the histogram crosses below the zero line, indicating increasing bearish pressure.
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Strategy Features:
Momentum Reversal Detection: Histogram zero-crossings often occur before full MACD line crossovers, allowing quicker entries.
Visual Histogram Plot:
Green columns = positive momentum Red columns = negative momentum Zero line plotted as reference baseline Configurable Pyramiding: Up to 10 active entries allowed, making it adaptable for scaling into strong trends. Realistic Simulation: Includes 0.05% commission to reflect real-world trading conditions.
Suggested Timeframes:
Suitable for 30m, 1h, and 4h charts in both crypto and traditional markets. Perform backtests to confirm edge based on asset volatility and behavior.
Final Notes:
MACD-based strategies perform best in clean trending environments. To avoid chop, users may consider combining this logic with volatility filters or moving average direction checks. Note: Different assets may require specific parameter adjustments. Users are responsible for optimizing the strategy settings for the asset they trade. Please ensure you fine-tune the parameters according to your trading pair.