The “MACD – Convergence / Divergence” strategy is based on the use of MACD indicator signals.
When trading this system, we use the indicator settings set in the MT4 terminal by default:
Fast EMA – period value 12
Slow EMA – period value 26
MACD SMA – period value 9
We will use bullish and bearish divergence signals as points for buying and selling. These signals indicate a possible trend change or trend reversal and the direction of price movement.
This divergence is formed when the maximum points on the chart diverge from the indicator readings. When a classic bullish divergence forms, we wait for the MACD-histogram to be below the signal line set on the indicator. When you open the next candle, you need to open a short position.
The stop loss is placed above the previous high by about 10 points. We fix the profit when its size is 2-3 times the size of the stop loss.
Similar to the previous algorithm, when a bearish divergence is formed, we wait for the MACD histogram to rise above the signal line. We make a purchase at the opening of the next candle.
The size of the stop loss and take profit are set in the same way as in the case of a bullish divergence.
Any financial instruments are suitable for using this strategy. It is better to look for divergence at intervals of 4 hours or more.