Divergence Cross Forex Trading Strategy

The Divergence Cross forex trading strategy is based on a custom built MACD divergence indicator for MT4.

This powerful strategy provides currency traders with easy to find buy and sell trading signals across all pairs.

Let’s get started with the chart setup…

Chart Setup

MetaTrader4 Indicators: MACD_Divergence.ex4 (default setting), MACD_Cross.ex4 (Input Variable modified; fast_ema_signal=15)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Divergence Cross Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following indicator or chart pattern gets displayed:

  1. If the red line of the MACD_Divergence.ex4 custom indicator crosses its teal line bottom up, while blue histograms forms above the 0.00 level as shown on Fig. 1.0, price is said to be pressured to the upside i.e. a signal to go bullish on the currency pair of interest.
  2. If the blue sphere of the MACD_Cross.ex4 custom indicator takes position below the candlesticks as illustrated on Fig. 1.0, it is a sign of more buyers in the forex market, as such a buy trigger is in the cards.

Stop Loss for Buy Entry: Place stop loss 3 pips below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes center stage:

  1. If the red line of the MACD_Divergence.ex4 custom indicator crosses its teal line top downward, with the blue histograms aligning below the 0.00 level as illustrated on Fig. 1.0, more buyers are said to be exiting their positions, hence an exit or take profit is advised.
  2. If the red sphere of the MACD_Cross.ex4 custom indicator gets spotted above the candlestick during an uptrend, it indicates a possible end to a buy signal, as such an exit or take profit is advised.

Sell Entry Rules

Initiate a sell entry if the following holds true:

  1. If the red line of the MACD_Divergence.ex4 custom indicator crosses its teal line top downward, while blue histograms forms below the 0.00 level as shown on Fig. 1.1, price is said to be pushed lower i.e. a signal to go bearish on the currency pair of focus.
  2. If the red sphere of the MACD_Cross.ex4 custom indicator gets aligned above price bars as depicted on Fig. 1.1, it is a sign of more sellers in the market, as such a sell signal is in place.

Stop Loss for Sell Entry: Place stop loss 3 pips above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following holds sway:

  1. If the red line of the MACD_Divergence.ex4 custom indicator crosses its teal line bottom up, with the blue histograms readjusting above the 0.00 level as seen on Fig. 1.1, more sellers are said to be closing their orders, hence an exit or take profit is recommended.
  2. If the blue sphere of the MACD_Cross.ex4 custom indicator gets spotted below the candlestick during an sell signal, it indicates a possible end to a sell trigger, as such an exit or take profit is warned.

Sell Trade Example

Fig. 1.1

Free Download

Download the Divergence Cross Forex Trading Strategy

About The Trading Indicators

The MACD_Cross.ex4 custom indicator is a modified Moving Average Convergence/Divergence oscillator that offers the best of both momentum and trend following, by deploying the signal line crossovers.

The MACD_Divergence.ex4 custom indicator is a powerful divergence tool that can spot price reversal points from support and resistance zones.

Share Now!