Divergence trading is one of the most effective methods for identifying trend reversals in forex and stock markets. The FX5 MACD Divergence Indicator for MetaTrader 4 makes this process simple by automatically scanning charts and alerting traders whenever a divergence occurs. It also provides arrow-based BUY and SELL signals, making trading decisions more straightforward.
How FX5 MACD Divergence Works
The indicator compares MACD lines and the histogram to identify two types of divergences:
Regular Divergence – plotted as solid lines.
Reverse Divergence – plotted as dotted lines.
Examples:
Regular Bullish Divergence: Price makes a lower low while the indicator forms a higher low.
Reverse Bullish Divergence: Price makes a higher low while the indicator forms a lower low.
Bearish divergences follow the opposite logic.
These divergences provide multiple trading opportunities by signaling potential trend reversals and continuations.
FX5 MACD Divergence Trade Signals
BUY and SELL signals are plotted as arrows on the chart.
Divergence lines are color-coded for clarity:
Bullish divergence → Green
Bearish divergence → Red
MACD lines are shown in Magenta and Blue.
Alerts notify traders immediately when a divergence occurs.
Signals are delayed by one candle to avoid repainting, ensuring filtered, reliable signals.
This indicator is ideal for both new traders, who benefit from visual divergence alerts, and experienced traders, who can confirm signals using the traditional MACD.
Usage & Recommendations
Applicable to any chart and all timeframes.
For optimal results, use higher timeframe charts.
Supports trading in both forex and stock markets.
Conclusion
The FX5 MACD Divergence Indicator for MT4 is an essential tool for traders seeking to identify bullish and bearish divergences quickly. It automatically scans the chart, provides alerts, and plots both regular and reverse divergences, saving time and increasing trading accuracy. Best of all, the indicator is free to download.
