MACD Divergence Strategy

MACD Divergence
MACD Divergence

Setup

MACD (12, 26, 9)

Entry

Buy if price movement shows down trend, but MACD shows bearish trend.
Sell if price movement shows up trend, but MACD shows bullish trend.

Exit

There is no set take profit for this strategy. I recommend using a trailing stop to catch as much of the wave as possible.

If a reverse signal is generated, close the current position first.

MACD Divergence

MACD Divergence

Currency Pairs

Any

Time Frames

Any, but works best on shorter time frames.

Stop Loss

Use the latest swing low as the initial stop loss for a BUY trade.
Use the latest swing high as the initial stop loss for a SELL trade.

Pros

  • Easy to spot signals.
  • Only one indicator used.

Cons

  • Not many signals on long term charts.
  • No clear take profit
  • Hard to automate