How to use the AVL indicator with MACD for better signals?

The AVL and MACD indicators together provide powerful confirmation in crypto trading—AVL tracks volume-driven accumulation or distribution, while MACD captures momentum shifts, enhancing signal reliability when both align.

Jul 31, 2025 at 09:22 am

Understanding the AVL Indicator and Its Role in Cryptocurrency Trading

The AVL indicator, also known as the Accumulation Volume Line, is a volume-based technical analysis tool that helps traders assess the flow of money into or out of a cryptocurrency asset. It accumulates volume on up days and subtracts volume on down days, creating a running total that reflects buying and selling pressure. When the AVL line rises, it indicates that volume is increasing during price upticks, suggesting accumulation by smart money. Conversely, a falling AVL line signals distribution, where volume is heavier during price declines.

This indicator is particularly useful in the volatile cryptocurrency market, where sudden volume spikes can precede major price movements. Unlike simple volume bars, the AVL provides a cumulative trend, making it easier to spot divergences between price and volume. For example, if the price of Bitcoin is making new highs but the AVL is flat or declining, this bearish divergence may suggest weakening momentum despite the upward price action.

Because the AVL is based on volume, it works best when combined with price-based oscillators like the MACD. Volume confirms the strength behind price moves, and pairing it with momentum indicators enhances signal reliability. This synergy allows traders to filter out false breakouts and identify high-probability entry and exit points in assets like Ethereum, Solana, or altcoins with erratic volume patterns.

Decoding the MACD: Momentum and Trend Confirmation

The Moving Average Convergence Divergence (MACD) is one of the most widely used momentum indicators in crypto trading. It consists of three components: the MACD line, the signal line, and the histogram. The MACD line is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The signal line is a 9-period EMA of the MACD line, and the histogram visualizes the difference between the two.

When the MACD line crosses above the signal line, it generates a bullish signal, suggesting upward momentum is building. A cross below indicates bearish momentum. The histogram’s expansion or contraction further illustrates the acceleration or deceleration of price movement. In fast-moving crypto markets, these signals can appear frequently, leading to whipsaws if used in isolation.

To improve accuracy, traders often wait for the MACD crossover to coincide with other confirming factors. This is where integrating the AVL indicator becomes essential. A bullish MACD crossover supported by a rising AVL line indicates not only momentum but also strong volume backing the move—making the signal more trustworthy. Similarly, a bearish crossover with a declining AVL reinforces the likelihood of a sustained downtrend.

Combining AVL and MACD: Identifying Convergent Signals

To effectively use the AVL indicator with MACD, traders must look for convergent signals where both tools align. This means checking whether volume trends (AVL) support the momentum signals (MACD). Here’s how to set up and interpret this combination:

• Open your preferred crypto trading platform (e.g., TradingView, Binance, or MetaTrader).
• Apply the MACD indicator to the chart using default settings (12, 26, 9).
• Add the AVL indicator—if not available, you can manually calculate it by tracking daily volume and adjusting based on price direction.
• Observe periods where the MACD line crosses the signal line.
• Simultaneously check if the AVL line is trending in the same direction as the MACD crossover.

For instance, if Bitcoin’s price is in a consolidation phase and the MACD generates a bullish crossover, examine the AVL. If the AVL is also turning upward, this confirms that buying volume is increasing, validating the breakout potential. On the other hand, if the MACD turns bullish but the AVL remains flat or drops, the move may lack volume support and could reverse.

This dual confirmation reduces false signals, especially in low-liquidity altcoins where price can be manipulated without significant volume.

Spotting Divergences for Early Warning Signs

One of the most powerful applications of combining AVL and MACD is detecting divergences—situations where price and indicator move in opposite directions. These often precede reversals.

• Bullish divergence: Price makes lower lows, but the AVL line forms higher lows, and the MACD histogram shows less bearish momentum (smaller negative bars). This suggests weakening selling pressure despite lower prices.
• Bearish divergence: Price reaches higher highs, but the AVL line fails to surpass its previous peak, and the MACD histogram shows shrinking positive momentum. This warns of fading buying interest.

To spot these:

• Use a 4-hour or daily chart for more reliable signals.
• Mark recent swing highs and lows on the price chart.
• Compare them with corresponding peaks and troughs on the AVL and MACD.
• Draw trendlines on the AVL and MACD to visualize divergence more clearly.

For example, if Ethereum climbs to $2,000, then $2,100, but the AVL only reaches 1.5M and then 1.4M, and the MACD peaks are lower each time, this triple confirmation (price up, volume down, momentum down) strongly suggests an upcoming reversal.

Practical Setup and Trading Example

Let’s walk through a real-time scenario using AVL and MACD together on a cryptocurrency chart:

• Choose a cryptocurrency pair, such as BTC/USDT on a 4-hour timeframe.
• Enable both MACD (12,26,9) and AVL on the chart.
• Wait for a MACD bullish crossover (MACD line crosses above signal line).
• Confirm that the AVL line is rising and has not flattened or declined.
• Check the volume bars beneath the price chart to ensure recent green candles have higher volume than red ones.
• Enter a long position at the close of the candle where both conditions are met.
• Place a stop-loss just below the recent swing low.
• Monitor the MACD histogram for signs of momentum weakening and the AVL for any flattening, which could signal an exit.

In a bearish scenario:

• Watch for a MACD bearish crossover.
• Ensure the AVL line is trending downward.
• Confirm with increasing volume on down candles.
• Enter short or exit long positions accordingly.

This method works across various crypto assets, including Binance Coin, Cardano, or meme coins during high-volume events.

Frequently Asked Questions

Can the AVL and MACD be used on all timeframes?

Yes, both indicators can be applied to any timeframe. However, signals on higher timeframes (daily, 4-hour) are more reliable due to reduced noise. Lower timeframes like 5-minute charts generate frequent but often false signals, especially in low-volume trading sessions.

What if the MACD and AVL give conflicting signals?

If the MACD suggests a buy but the AVL is declining, it indicates weak volume support. This is a red flag. It’s best to avoid entering a trade until both indicators align or until additional confirmation (such as support/resistance levels or RSI) supports the decision.

Is the AVL indicator available on all trading platforms?

Not all platforms label it as “AVL.” On TradingView, search for “Volume Accumulation” or “Cumulative Volume.” On Binance, you may need to use custom scripts or third-party tools. Some platforms integrate it under volume profile tools.

How do I adjust MACD settings when using it with AVL?

The default (12,26,9) works well for most cases. However, for faster cryptocurrencies like Solana or Dogecoin, consider shortening to (8,17,5) to increase sensitivity. Always backtest any changes using historical data to ensure consistency with AVL confirmation.