In this article, we are going to present another technical indicator designed for the Metatrader 4 platform, which shows divergences between the price and the MACD indicator both in the price chart and in the indicator window. That is, it signals the times when the price is moving in one direction and the MACD is moving in the opposite direction. Trading with divergences between price and indicator is a popular way to use the MACD and other oscillator-type indicators, such as RSI, CCI, and Stochastic Oscillator.
Basically, divergences occur when the price moves in one direction and the indicator moves in another, that is, they start to diverge. In the case of the MACD, which is an indicator of price momentum, a divergence may indicate that market momentum is starting to change and therefore the price may start to move in the opposite direction at any time. We can distinguish two basic types of divergences between price and MACD:
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