Can MACD column turn from negative to positive to confirm trend reversal?

The MACD histogram turning positive signals strengthening bullish momentum, often preceding trend reversals in crypto markets like Bitcoin and Ethereum.

Jul 28, 2025 at 04:07 am

Understanding the MACD Indicator Structure

The MACD (Moving Average Convergence Divergence) is a momentum oscillator widely used in technical analysis within the cryptocurrency market. It consists of three main components: the MACD line, the signal line, and the MACD histogram (column). The MACD line is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The signal line is typically a 9-period EMA of the MACD line. The histogram represents the difference between the MACD line and the signal line, visually displayed as bars above or below the zero line.

When the MACD column (histogram) is above zero, it indicates that the MACD line is above the signal line, suggesting bullish momentum. Conversely, when the column is below zero, it reflects bearish momentum. A shift from negative to positive values in the histogram signals that the short-term momentum is overtaking the longer-term average, potentially indicating a shift in market sentiment.

How the MACD Histogram Reflects Momentum Changes

The MACD histogram acts as a visual cue for the strength and direction of momentum. Each bar's height shows the degree of separation between the MACD line and the signal line. When the bars are contracting while below zero, it suggests weakening bearish momentum. A subsequent expansion above zero indicates increasing bullish pressure.

A transition from negative to positive in the MACD column often occurs when the MACD line crosses above the signal line. This crossover is known as a bullish signal line crossover. However, the histogram turning positive adds another layer of confirmation because it reflects not just a cross, but a sustained shift in momentum. In fast-moving crypto markets like Bitcoin or Ethereum, this change can precede price reversals, especially when aligned with volume spikes.

• Monitor the histogram bars shrinking in height while below zero
• Observe the bar crossing the zero line into positive territory
• Confirm the move with increasing bar height above zero
• Validate using concurrent price action and volume data

Identifying Potential Trend Reversals in Cryptocurrency Charts

In cryptocurrency trading, trend reversals are notoriously volatile and rapid. A MACD column turning from negative to positive can serve as an early signal of a potential bullish reversal, especially when observed at key support levels or after extended downtrends.

For example, on a 4-hour BTC/USDT chart, if the price has been declining for several days and the MACD histogram has been negative, a sudden shift to positive bars may suggest accumulation by buyers. Traders often pair this signal with other indicators such as RSI (Relative Strength Index) or volume profiles to reduce false positives.

• Look for the histogram transition during oversold RSI conditions (below 30)
• Check for bullish candlestick patterns like hammer or engulfing at support
• Ensure trading volume increases as the histogram turns positive
• Avoid acting on the signal if the broader market trend remains bearish

It's important to note that in highly leveraged crypto markets, whipsaws are common. A brief positive swing in the MACD column may not lead to a sustained reversal. Hence, patience and confirmation are essential.

Practical Steps to Confirm a Reversal Using MACD Column

To use the MACD column turning positive as a reliable signal, traders should follow a structured approach. This method applies to platforms like TradingView, Binance, or MetaTrader when analyzing any cryptocurrency pair.

• Open your preferred charting platform and load the desired crypto asset (e.g., ETH/USD)
• Apply the MACD indicator (default settings: 12, 26, 9)
• Locate periods where the histogram is negative and observe its behavior
• Wait for the histogram bars to cross above the zero line
• Confirm that at least two consecutive bars remain positive
• Cross-verify with price breaking above a recent swing high or resistance level
• Check order book depth on exchanges to see if buy-side liquidity is increasing

Some traders also adjust the MACD settings (e.g., 8, 17, 9) for faster signals in intraday crypto trading. However, tighter settings may increase noise. The default configuration remains the most widely trusted for swing and positional trading.

Limitations and False Signals in Crypto Markets

Despite its popularity, the MACD histogram is a lagging indicator, derived from moving averages. In the cryptocurrency space, where news and macro events can trigger sharp price movements, the MACD may generate false positives. For instance, a sudden dip due to regulatory news might cause the histogram to go deeply negative, followed by a quick rebound that turns the column positive — yet the overall downtrend continues.

Moreover, during low-volume periods or sideways consolidation, the MACD column may fluctuate around zero without confirming any real trend. This is common in altcoins with thin order books. Traders relying solely on this signal may enter premature long positions.

• Avoid trading based solely on MACD column shifts
• Combine with on-chain metrics like exchange outflows or whale movements
• Use multiple time frame analysis (e.g., daily + 4-hour) to filter noise
• Be cautious during major news events or exchange outages

Even when the MACD column turns positive, it does not guarantee a reversal. It only indicates a change in short-term momentum, which may be temporary.

Integrating MACD Column Signals with Price Action

Smart traders integrate the MACD column transition with actual price behavior. For example, if the histogram turns positive while the price forms a higher low and breaks a descending trendline, the reversal signal gains credibility.

On a 1-hour SOL/USDT chart, suppose the price has made lower lows, but the MACD histogram starts forming higher lows despite the price still declining. This divergence, followed by the column turning positive, is a strong hint of bullish divergence.

• Identify price making lower lows while MACD histogram makes higher lows
• Wait for the price to break a key resistance level
• Confirm with a green candle closing above the 50-period EMA
• Enter long with stop-loss below the recent swing low

This confluence of divergence, histogram shift, and breakout increases the probability of a successful trade.

Frequently Asked Questions

Can the MACD column turning positive occur during a downtrend?

Yes, the MACD column can turn positive even within a broader downtrend. This often happens during short-term bounces or dead cat rebounds. Without a break of key resistance or shift in volume, such moves lack sustainability.

Does the MACD column need to stay positive for multiple periods?

It is safer to wait for at least two consecutive positive bars. A single positive bar may result from noise or a minor pullback, not a genuine reversal.

How does the MACD column differ from the MACD line crossover?

The MACD line crossover occurs when the MACD line crosses above the signal line. The column turning positive reflects the same event visually, but emphasizes the momentum shift through bar height and zero-line cross.

Is the MACD column effective for all cryptocurrencies?

The effectiveness varies. Major coins like Bitcoin and Ethereum with high liquidity tend to produce more reliable signals. Low-cap altcoins with erratic volume may generate misleading histogram shifts.