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elders impulse system and MACD histogram

Chip Anderson published an article in 2012 titled "digging deeper into elder's impulse system" In that article he showed an Elder chart of FAST and below, just two indicators, MACD, (13,0) with an overlay of Slope (2) and the next one, MACD histogram (12,26,9) with an overlay of Slope (2).
According to Chips article: "the second indicator shows the slope of the 12,26,9 MACD Histogram. If the black line (Slope (2)) is above zero, the histogram is rising. If it is below zero, it is falling.
I used the same setup in my stock's "Daily elder chart", see: http://stockcharts.com/h-sc/ui?s=AMKR&p=D&yr=0&mn=8&dy=0&id=p84970074153&a=389401598
In my AMKR chart (see above link), the Slope(2) of the MACD Histogram is falling sharply, BUT the histogram itself is rising and I don't understand why.
Any help will be greatly appreciated

Best Answer

  • gordgord admin
    edited February 2015 Accepted Answer
    Yes the Slope(2) number is falling sharply but it is still positive as the MACD Hist is still rising, (although not by much).

    When the Histogram rises sharply the Slope of that rise will be a higher number, when the Histogram is virtually flat but still rising the Slope will drop to virtually zero, this is what you are seeing on your chart.

    I see Markd has already given you a great explanation. I had a chart ready which might also help.


Answers

  • markdmarkd mod
    edited February 2015
    If slope is above zero, the histogram bar is higher than the day before by some amount; if below zero the histogram bar is lower than the day before, again by some amount.

    The direction of the slope line varies with the amount that one bar exceeds another.

    So, if bar B increases over bar A by, say, 5, and bar C exceeds bar B by 12, then the slope line be above zero AND it will climb.

    But then, if bar D exceeds bar C by only 3, the slope line will fall, because D increased by less than C versus the previous bar. It doesn't go below zero because the change from C to D is still positive.
  • Gentlemen(Markd and Gord): I really appreciate both of your answers, and the chart helped out a great deal by creating a visual answer. thanks again.
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