Signals from the MACD Indicator can tend to lag behind price movements. The MACD Histogram shows the divergence between the MACD and its reference line (the 9-day Exponential Moving Average) by normalizing the reference line to zero. As a result, the histogram signals can show trend changes well in advance of the normal MACD signal.
A buy signal is generated as the histogram crosses above the zero point. A sell signal is generated as the histogram crosses below zero.
Divergences: Buy and sell signals can also be generated by looking for positive and negative divergences between the MACD Histogram and the underlying stock. Bearish divergency is one where the price is making a new high, but the Histogram is failing to surpass a previous high. Bullish divergency is one where the price is making a new low, but the Histogram is failing to surpass a previous low. This divergences may be and indication of an impending reversal.