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Glossary · Indicators

Histogram (indicator)

A bar display of an indicator's value around a zero line; in MACD it shows the gap between the MACD line and its signal line.

By Sky Trade editorial teamUpdated

On trading charts a histogram is a column chart drawn below price, with bars above or below a zero line. The best-known example is the MACD histogram, which plots the difference between the MACD line and its signal line. Other tools, such as the Awesome Oscillator, are drawn the same way.

The histogram makes changes of pace visible. Growing bars mean the two lines are moving apart, so momentum is building. Shrinking bars mean they are converging, and a crossover may follow. A flip from positive to negative is, by definition, a MACD crossover.

Many traders watch the histogram for an earlier hint than the crossover itself: bars getting shorter while price still rises can signal that the push is tiring. The catch is that earlier also means less confirmed, so shrinking bars often lead nowhere and the trend simply continues.

Bar height is also not comparable between instruments or timeframes, because it is measured in price units. Compare the histogram with its own recent history, not with absolute numbers. See MACD explained and divergence.

Example

MACD histogram bars on GBP/USD read +0.0006, +0.0005, +0.0003 while price makes a slightly higher high. Momentum is fading, though the next bar could just as easily grow again.

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