Many traders use the MACD for divergence or crossover signals. It is my opinion that market participants trade almost every oscillator this way. This I find rather simplistic and not respecting what the data shows you. In this tutorial I will show a new approach to reading the MACD , obviously I’m probably not the only person who looks at MACD this way however.
MACD colors:
blue = MACD
orange = Signal line
green and red waves = histogram

The MACD is based on the distance between 2 exponential moving averages. The signal line is a smoothed version of the centered oscillator that difference creates. And the histogram is the difference between the MACD and signal line, this is extremely simple.

On the chart I have plotted these 2 EMA’s for clarifying my approach to the MACD . Notice that when price rapidly changes these 2 lines move away from eachother, we see the MACD line also move away from the signal line in the process creating a big histogram wave. After the trend becomes less volatile and more one directional the EMA’s stay at the same distance from eachother. This creates a flat histogram.

The trading approach I’m showing here is that instead of trading tops and bottoms from the histogram/crossovers you use the MACD as a directional tool and you use the histogram as a volatility tool. We wait for a crear trend to get established after a big histogram wave and then for the trend to stabilise: MACD histogram flattening. Now we have a one directional trend and it is a good place to start opening positions in the trend direction as it is stable.

Notice how we got a nice discount after the trend stabilised and became on directional. I provide below some snapshots of how the market looked when trades would have been opened:

long setup:

short setup:

result:

Use this information with caution as these examples are obviously cherry picked. I hope this gives some perspective on using the MACD in your trading arsenal.