The Technical Analysis Forex Indicator, MACD (Moving Average Convergence/Divergence), also helps us to identify possible entry points when there are divergences between the price and the MACD Indicator on Metatrader 4.
How to use the MACD Indicator for Divergences on Metatrader 4:
The parameters for this indicator are:
Fast EMA: Fast Moving Average 12 periods here.
Slow EMA: Slow Moving Average, 26 periods here.
MACD SMA: it’s the MACD line, calculated by subtracting the Slow MA value from the Fast MA and taking nine periods.
Apply to: It’s always applied to the candlestick CLOSE.
In this example, we can see a short-position entry point.
The MACD reaches the lowest maximums (that means, it goes down) and the price reaches the highest maximums (that is, it goes up). This could be a sign that the strength of the price movement is soon to be over. This divergence is known as Negative Divergence.
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