Will the weekly MACD red column begin to show a mid-line buying point?

A shrinking red MACD histogram on the weekly chart near the zero line suggests weakening bearish momentum and may signal a potential mid-line buying opportunity.

Jul 28, 2025 at 09:21 pm

Understanding the MACD Indicator in Cryptocurrency Trading

The MACD (Moving Average Convergence Divergence) is a widely used technical analysis tool in the cryptocurrency market. It consists of three components: the MACD line, the signal line, and the MACD histogram (often referred to as the "column"). The histogram represents the difference between the MACD line and the signal line. When the histogram appears in red, it indicates that the MACD line is below the signal line, suggesting bearish momentum. Conversely, a green histogram signals bullish momentum. Traders often look for changes in the color and size of the histogram to anticipate trend reversals.

In the context of weekly charts, the MACD provides a broader view of momentum, filtering out short-term noise. A red column shrinking in height on the weekly MACD can suggest weakening bearish pressure. If the red bars begin to shorten consistently, it may foreshadow a potential crossover where the MACD line rises above the signal line. This crossover, especially when occurring near the zero line (mid-line), is often interpreted as a possible mid-line buying point.

What Constitutes a Mid-Line Buying Point?

A mid-line buying point on the MACD occurs when the MACD line crosses above the signal line while both are near the zero level. The zero line acts as a centerline that separates positive and negative momentum. When the MACD lines are close to zero, it indicates that the short-term and long-term moving averages are converging, meaning the asset may be transitioning from a downtrend to a neutral or upward trend.

For a weekly MACD, this scenario is particularly significant because it reflects a shift in longer-term momentum. Traders watch for the histogram bars to transition from red to green while positioned near the zero line. The key signal is not just the color change, but the context of the crossover location. A crossover deep in negative territory may lack strength, whereas one near the mid-line carries more weight as a potential entry signal.

How to Identify a Shrinking Red Column on Weekly MACD

To determine whether the weekly MACD red column is beginning to show signs of a mid-line buying point, follow these steps:

• Open a cryptocurrency charting platform such as TradingView or Binance Chart.
• Select the desired cryptocurrency pair (e.g., BTC/USDT).
• Change the timeframe to "1W" (weekly).
• Apply the MACD indicator if not already visible.
• Observe the histogram below the price chart: locate the most recent red bars.
• Check whether the height of the red bars is decreasing over the last 1–3 weeks.
• Confirm that the MACD line and signal line are approaching the zero line from below.

A consistent reduction in the red column’s height suggests diminishing downward momentum. This contraction is a prerequisite for a potential bullish reversal signal. It is essential to avoid acting on a single week’s data. Instead, look for a pattern of contraction over multiple weeks to increase the signal’s reliability.

Confirming the Signal with Price Action and Volume

While the MACD provides momentum insight, it should not be used in isolation. To validate a potential mid-line buying point, incorporate price structure and volume analysis:

• Examine whether the price has formed a higher low or broken out of a descending trendline.
• Look for bullish candlestick patterns such as hammer, engulfing, or morning star on the weekly chart.
• Check if trading volume has increased during up-weeks and decreased during down-weeks, indicating shifting sentiment.
• Ensure that the price is not facing strong resistance immediately above, which could limit upward movement.

For example, if Bitcoin’s weekly MACD shows shrinking red bars near the zero line, and the price has just closed above a key moving average like the 50-week EMA on rising volume, the confluence strengthens the case for a valid mid-line buying opportunity.

Setting Up Alerts and Entry Strategies

Traders can proactively monitor for this setup by configuring alerts:

• On TradingView, click the “Alerts” button and set a condition for “MACD Histogram changes from negative to positive.”
• Alternatively, create a custom alert when “MACD Line crosses above Signal Line” on the weekly timeframe.
• Use a limit order just above the weekly close once the crossover occurs to enter at a controlled price.
• Place a stop-loss below the recent weekly low to manage risk.
• Consider scaling in: deploy 50% of position on the initial crossover, and the remainder if price confirms upward momentum in the following week.

It is crucial to remember that weekly signals develop slowly. A single week’s data may not be sufficient. Wait for confirmation candles and avoid premature entries based on anticipation alone.

Common Misinterpretations of the MACD Red Column

Many traders misread the MACD histogram, especially on higher timeframes. A shrinking red column does not automatically mean a buy signal. The following pitfalls should be avoided:

• Assuming that any reduction in red bars implies a reversal — the lines must also be near the zero mid-line.
• Ignoring the broader trend: a MACD bounce in a strong downtrend may only be a pullback, not a reversal.
• Acting on a histogram color change without waiting for the actual line crossover.
• Overlooking divergences: sometimes, the price makes a new low while the MACD red bars get shorter — this bullish divergence can precede a strong reversal.

Understanding these nuances helps prevent false signals and improves decision-making accuracy.

Frequently Asked Questions

What does a shrinking red MACD column indicate on the weekly chart?

A shrinking red column indicates that bearish momentum is weakening. If this occurs near the zero line, it may precede a bullish crossover, suggesting a potential entry point for long positions.

Can the MACD mid-line buy signal fail?

Yes. Even when the MACD line crosses above the signal line near zero, the price may continue to decline due to external factors like macroeconomic news or exchange outflows. Always use additional confirmation tools.

How long should I wait after the MACD crossover to enter a trade?

It is advisable to wait for the weekly candle to close above the crossover point. Entering after confirmation reduces the risk of false signals caused by intra-week volatility.

Is the weekly MACD more reliable than daily for buy signals?

The weekly MACD is less prone to noise and reflects stronger institutional-level momentum. While slower to generate signals, its indications often carry greater weight than daily chart signals.