MACD Divergence Indicator MT4 | MT5

The MACD Divergence indicator is an advanced version of the classic Moving Average Convergence Divergence oscillator, developed to automatically identify divergence patterns between price action and the MACD. 

However, this indicator plots divergences, which can signal a weakening of the current trend and a possible reversal, directly on the chart using lines and arrows. There are two types, which traders can be used for long or short entries:

• Bullish Divergence: 

- When the price forms lower lows, duirng a downward trend, while the MACD shows higher lows, it signals a potential bullsih reversal, and traders should exit their selling poistions and enter long in the market.

• Bearish Divergence:

- When the price forms higher highs, during an upward movement, but the MACD indicates lower highs, it signals a potential bearish reversal, and traders should exit their buying positions and enter short in the market.

To avoid false signals in a real-time trading, traders should wait for a confirmation with a significant bullish or bearish candle to make a decisioon, whether long or short entry. 

1/ In the first trading example on the MT5 chart, at the end of a downward trend, the price, as usual, forms lower lows, but in the indicator's window, the MACD presents higher lows, which suggetsing a potentail bullish divergence. 

This confirmed with the appearence of the blue arrow of the indicator, signaling an exit point for the short trade in the AUDNZD pair, and a potential long entry in the market, enabling traders avoid loss position and make a profit in the opposite direction.

2/ In the second trading example on the MT4 chart, this indicator's version is a bit different compared to the MT5 version but with the same purpose. Toward teh uptrend's end, the price, as always, forms higher highs, but in the indicator's window, the MACD presents lower highs, which suggetsing a potentail bearish divergence. 

This confirmed with the appearence of the red arrow of the indicator, signaling an exit point for the long trade in the EURUSD pair, and a potential short entry in the market, enabling traders avoid loss position and make a profit in the opposite direction.