FX5 MACD Divergence Indicator

The FX5 MACD Divergence Indicator displays divergences between price and the MACD indicator. After you load the indicator onto the chart, it appears in both the main activity chart and a sub-window below the main chart. This divergence indicator may make trading simple because it draws the actual buy and sell signals on the chart. You may not be required to identify the positive or negative divergence between price and MACD on your own.

What is the FX5 MACD Divergence Indicator?

Divergence trading is an effective approach for detecting early bullish and bearish trend reversals. Identifying a divergence, on the other hand, is the key to this forex trading approach. When there is a divergence, the FX5 MACD Divergence Indicator scans the chart and alerts the forex trader. Furthermore, the indicator offers BUY and SELL recommendations with arrows. The MACD Divergence indicator compares the MACD lines to the histogram and presents two types of divergences: ordinary and reverse divergences. The regular divergence is represented by solid lines, whereas the reverse divergence is represented by dotted lines. While the price makes a new lower low, the indicator makes a higher low in a normal bullish divergence. In a reverse bullish divergence, the price creates a new higher low while the indicator makes a lower low. A bearish divergence is the inverse of this. The indicator is a versatile tool that gives forex and stock traders with different trading chances by displaying regular and reverse divergence and convergence.

Setting up the FX5 MACD Divergence Indicator
Setting up the FX5 MACD Divergence Indicator

FX5 MACD Divergence Strategy

To avoid repainting the trading signals, the signals are postponed for one candle. The delay is unavoidable for technical traders because the indicator offers filtered signals. However, experienced technical traders can confirm the indications by using the classic MACD indicator. The MACD lines are drawn in magenta and blue by the indicator, while the positive divergence in the price chart and indicator is drawn in green. In the opposite direction, the indicator depicts a bearish divergence in red. The indicator depicts divergence and convergence as colored lines. In addition, the indicator sends out alerts when there are signals. These characteristics make it useful for beginner forex and stock traders who find it difficult to notice and confirm convergence and divergence. However, for experienced forex and stock traders, the indicator detects divergences and promptly presents them for further action. The FX5 MACD divergence indicator can be used on any chart and in any timeframe.

Buy Signal

The following could be your checklist for a buy trade:

  • When the magenta MACD line crosses the blue MACD line upwards.
  • When a green upward signal arrow appears on the indicator window.

Once these events occur:


  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when a red downward signal arrow appears on the indicator window.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
FX5 MACD Divergence Indicator Buy Setup
FX5 MACD Divergence Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the magenta MACD line crosses the blue MACD line downwards.
  • When a red downward signal arrow appears on the indicator window.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when a green upward signal arrow appears on the indicator window.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
FX5 MACD Divergence Indicator Sell Setup
FX5 MACD Divergence Indicator Sell Setup

FX5 MACD Divergence Pros & Cons

Pros

  • The FX5 MACD Divergence Indicator may be used by traders to spot divergence patterns on their charts.
  • This indicator may assist in identifying potential trend reversal zones.

Cons

  • The aspect of trading with divergence may require some level of experience to understand fully.
  • This indicator may sometimes mistake a trend continuation for a trend reversal, and vice versa.

Conclusion

The FX5 Divergence Indicator for is a good option for forex and stock traders who want to trade bullish and bearish divergences. It evolves as a critical technical instrument. It monitors and notifies forex and stock traders to both regular and reverse divergence. This indicator, though useful, doesn’t present accurate signals 100% of the time. It is also prone to generating false signals like other technical indicators.

Free Forex Robot