Overview of the macd-divergence-indicator
The macd-divergence-indicator for MT4 enhances the standard MACD by automatically detecting and drawing divergence signals. It plots trendlines both on the price chart and on the MACD histogram, alerting traders to potential reversal zones or weakening trends. This helps in identifying early entry points for trades based on classic divergence analysis.
The indicator works by comparing the MACD’s behavior to the price action. When price forms a higher high while the MACD forms a lower high (or vice versa), it marks a potential divergence and draws corresponding lines. Alerts can also be triggered when such conditions are met.
How to Use It in Practice
In live trading, this indicator can be used to:
- Spot bullish or bearish divergence between price and MACD, signaling potential reversal zones.
- Use the visual trendlines for both indicator and price to confirm signals more easily.
- Get real-time alerts when a divergence is detected, allowing timely decision-making.
- Combine with support/resistance or other indicators to enhance entry timing.
This tool is particularly useful for traders who rely on momentum shifts and divergence analysis as part of their strategy. It automates what would otherwise require careful manual observation.
Parameter Explanations
fastEMA
Sets the period for the fast Exponential Moving Average used in the MACD calculation. This controls how sensitive the MACD is to recent price changes.
slowEMA
Defines the period for the slow EMA in the MACD calculation. A longer period smooths out the indicator and reduces false signals.
signalSMA
Specifies the period of the Signal line, which is a simple moving average applied to the MACD line to generate crossover signals.
drawIndicatorTrendLines
If set to true, the indicator will automatically draw trendlines on the MACD histogram where divergence is detected.
drawPriceTrendLines
If true, the indicator will draw trendlines on the price chart to visually represent divergence points.
displayAlert
When enabled, the indicator will show pop-up alerts when a divergence pattern is identified, helping you act promptly.
