Momentum Divergence, an MT4 trend reversal indicator, is called. It monitors price movements and detects divergence buy-sell signals. Divergence is one way to determine the exact price swing levels. Technical traders use momentum indicators to spot price swings that are not consistent. This allows them to spot potential divergence signals. MACD and RSI can be used to assess potential divergence scenarios.
MT4 upgraded indicators have been developed, so you can always improve your trading strategy to pick the best trade signal. We found that the indicator adapts very quickly to MTF charts when we reviewed the momentum divergence. It automatically filters out weak divergence and displays highly probable trading signals.
The Momentum Divergence also provides detailed information along with potential signals. The red/green arrow indicates whether the divergence is bullish or bearish. The indicator window and the main chart both show how divergence formed.
This guide will teach you how to consistently trade stocks and forex using the Momentum Divergence indicator in MT4.
How to identify potential buy-sell signals by using the Momentum Divergence Indicator (MT4)
Momentum Divergence displays trend lines on the indicator window and main chart to indicate potential divergence. It also includes green/red Arrows that indicate the direction of future price movements.
The indicator uses the principle of divergence to generate buy/sell signals. The price will show a lower low and the indicator level showing a higher low indicates a bullish divergence. It is a sign of a bearish divergence when the price falls from a higher peak and the indicator level makes a lower peak.
The EURUSD chart above shows how Momentum Divergence works on MT4 charts. The price initially went bearish after it made a lower low. The indicator line then made a lower low, which indicated a bullish divergence. The automated trendlines illustrate how the indicator identified the setup as a bullish signal of a trend reversal. A buy confirmation is indicated by the tiny green arrow located below the indicator level.
When the indicator detected a bearish divergence signal, we decided to exit our buy order. However, waiting for the opposite signal to close a trade position can lead to a late exit. Consider an immediate exit once the trade reaches your profit target.
Momentum Divergence, a MT4 indicator that can be used to counter-trend trades in stocks and forex, is the best. It not only shows bullish/bearish signals but also plots trend lines that show how divergence formed. It aids beginners in understanding the basics of trend-reversal. You can also track long-term market trends and identify profitable buy-sell possibilities.