The MACD Divergence Forex indicator for Metatrader 4 scans the market for bullish and bearish divergences between price and MACD.
Traders often use divergences to find early trend reversal points in existing trends.
How to interpret?
- A bullish signal occurs when there’s a bullish divergence between price and the MACD Divergence indicator.
- A bearish signal occurs when there’s a bearish divergence between price and the MACD Divergence indicator.
For scalping and day trading purposes, the indicator performs the best during the London and U.S. trading sessions.
The indicator can be easily combined with other technical tools for optimal trade entry.
The picture below is an example of how the MACD Divergence indicator looks like when applied to the EUR/USD 1-hour trading chart.
How to buy and sell currency pairs with the MACD Divergence Forex indicator?
The indicator can be used in multiple ways, please find a classic trading example below:
- Open a buy trade when the overall trend is upward and the indicator shows a positive divergence.
- Place your stop loss 1-2 pips below key support.
- Exit the buy trade near previous key resistance or wait for a sell signal.
- Open a sell trade when the overall trend is downward and the indicator shows a negative divergence.
- Place your stop loss 1-2 pips above key resistance.
- Exit the sell trade near previous key support or wait for a buy signal.
How to I install and run this Forex indicator on Metatrader 4?
- Download the macd-divergence.ex4 indicator file here and save it to your computer
- Open the Metatrader 4 trading platform
- From the top menu, click on “File” to open the drop down menu
- Select the “open data folder” and navigate to the “MQL4” folder
- Then navigate to the “Indicators” folder
- Copy the indicator into the “Indicators” folder
- Close the trading platform and restart it
- The indicator will be automatically installed on MT4
- You will find the installed indicator in the Navigator window
- In order to start using it, drag and drop the indicator to the chart