MACD divergence Trading strategy

The MACD Divergence strategy is based on the MACD indicator and is one of the most reliable trading strategies. This strategy generates its trading signals on the divergence between the MACD line and the price of the currency pair. Although the entry and exit points of this strategy are rather imprecise, the signals are quick and easy to spot and traders can take corrections and trend reversals with them.

Advantages of this strategy

✔ Signals are easy to recognize

✔ only 1 standard indicator is used

✔ the profit potential is relatively good

Disadvantages of this strategy

✖ Take Profit and Stop Loss brands are rather imprecise

✖ few signals in large time windows

Application of the strategy

The MACD Divergence strategy should work with any currency pair. However, shorter time frames are better suited as they offer more opportunities and generate more signals.

Add the MACD (Moving Average Convergence/Divergence) indicator to any chart.
Set the fast EMA to “12”, the slow EMA to “26”, the MACD-SMA to “9” and “Apply to:” to “Close”.

When do I enter a trade with the Moving Average Cross Strategy?

Go long when the price is showing a downward trend and the MACD indicator is showing an upward trend.

Go short when the price is up and the MACD indicator is down.

When do I exit a trade in the Moving Average Cross strategy?

Place the stop loss on the next support area when going long. Place the stop loss on the next resistance area if you go short.

Set the take profit to the next resistance range if you go long. Set the take profit to the next support range if you go short.

If the system generates a reversal signal, close the open position before opening a new position.

Example:

In the example above, we see the EUR/USD in the M30 time window. As you can see on the chart, the price is in a downward trend, while the MACD indicator is rising over a longer period of time. The possible entry point is marked where a reversal was foreseeable and one could have entered the trade. The stop-loss was placed on a support that was previously tested 2 times. The take-profit mark was placed in the area of a possible resistance level.

Warning:

The use of Forex strategies is at your own risk. Broker-Bewertungen.de makes these available to its visitors free of charge and is not responsible for any losses incurred through the use of the Forex strategies. Please test all strategies thoroughly on demo accounts before using them on a real money account.


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