This indicator employs the MACD and divergent lines. It draws divergent lines on the main trading chart. It also displays FX5 MACD Divergence Indicator and other divergent lines on a separate chart below the main trading chart.
This indicator can be used to trade any currency pair of your choice. It also has no designated time periods within which it is supposed to be used. It can also be used with any timeframe. The only difference will be that the indicator will give signals more frequently on a tighter timeframe than if it was used on a less tight time frame.
The main trading signals are displayed on the separate chart below that main chart in form of green and red arrows.
For most traders, whenever the term divergent lines is mentioned, they fill that it is not sufficient to use to place orders. But with this indicator, the divergent lines are set to automatically form and when the conditions are right for placing an order, the indicator will automatically give the necessary signals. There is no stress trying to analyze the divergent lines in relation to the market prices.
Fig.1. The FX5 MACD Divergence Indicator explained.
From the chart above it is clear that the indicator produces divergent both on the main trading chart and in the indicator’s chart. There is no difference between the two divergent lines.
Although there are divergent lines, the main thing that the indicator uses to produce signals is the crossing or touching of the MACD purple and blue lines. When the two line get close to each other or cross and there happens to be divergent line that ends at that point then there is a signal that is given. The divergent lines are mainly green or red dotted lines. The red lines are used to give a signal for a downward trend while the green divergent lines are used to upward trend signals. When a red divergent line touches either of the two MACD lines (the purple or the blue), a signal showing that there is a downward trend predicted is given by the formation of a red arrow. On the other hand when a green divergent line touches either of the two MACD lines (the purple or the blue), a signal showing that there is an upward trend predicted is given by the formation of a green arrow.
Another thing worth noting is that the indicator gives an alert whenever there is a reverse (bullish or bearish) divergent.
How should a trader use the FX5 MACD Divergence Indicator to trade?
With any indicator, this is the fore most question that the trader will want answered. But it is always important to know what is happening behind the scenes for you to then trust the indicator when trading.
- Placing a buy: for the trader to place a buy, he or she just have to wait for the formation of the green arrow in the indicator’s chart.
- Placing a sell: a sell is placed when the indicator forms a red downward arrow in its chart.
At all times, the trader should place his or her order after the second candle after the signal is given starts to form. Then the orders should be closed immediately there is an opposite signal that is given.
Examples of placing orders using the FX5 MACD Divergence Indicator.
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