The Forex Divergence H4 Strategy represents a Commodity Channel Index (CCI) based MT4 trading system. It automatically spots divergence setups on MT4 charts and performs best on H4 (4-hourly) timeframes.
Besides trade signals, this indicator also shows divergence patterns by showing the changes in highs and lows of the price. It applies a 14-period CCI combined with 12, 26 EMAs and a 9-period signal-SMA to identify price-reversal conditions.
The red horizontal lines representing 140 and -140 levels represent the overbought and oversold zones. Therefore, when the indicator generates a divergence signal, we’ll execute an entry depending on the market’s current OB/OS condition.
Buy Signal Generation with Forex Divergence H4 Strategy
We’ll consider a bullish divergence signal for going long during an oversold market condition. So, make sure the bullish divergence signal appears near the -140 level.
In the above example, when the price made a lower low, the forex divergence H4 line plotted higher high including arrow signals to indicate a bullish divergence. Eventually, it was a perfect setup for going long. Also, consider exiting long when the indicator confirms a bearish divergence while the CCI hits 140.
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Sell Signal Generation with Forex Divergence H4 Strategy
According to the above example, the indicator plotted a bearish divergence signal at an overbought market condition. Here the CCI created a lower high right below 140 while the price made a new high. Once you go short, wait until the indicator confirms a bullish divergence in an oversold market.
The Forex Divergence H4 Strategy offers one of the most convenient processes of approaching divergence trading. Since it is a tricky trading strategy, traders must assess the trade setups and levels as correctly as possible.
Thankfully, the H4 divergence strategy can generate real-time divergence signals that help traders maintain a better trading accuracy and a higher winning rate.