MACD Colored Indicator is an upgraded version of one of the most popular forex momentum indicators “Moving Average Convergence Divergence (MACD)”. This indicator is able to find possible swing-high and swing-low of the market thus helping traders to define the market trend from a very early stage.
MACD Colored Indicator is well known for its versatility in use. You can apply it on any forex currency pair chart you like. Furthermore, this indicator can be used for scalping, intraday/day trading, and long-term investments all at the same time.
Once the indicator is installed successfully in your MT4 terminal, your trading chart will appear like the following image:
MACD Colored Indicator Interpretation
The indicator uses a combination of 5-day fast and 15-day slow Exponential Moving averages (EMA) in order to find the crossover signals. A bullish crossover is expressed through MACD bars with positive values. Oppositely, for bearish crossovers, the bars turn negative in values.
For better understanding, the indicator uses a change in the colors of its bars. The bars turn green when the value is positive and turns red when the value turns negative. We recommend traders wait for at least 3 consecutive positive or negative bars for a better confirmation of the trend signals.
Also Read: How to Build an Ideal Trading Strategy in Forex?
MACD Colored Indicator: Buy Conditions
- The indicator bars turn green carrying a positive value
- Buy triggers after 3 consecutive green bars are formed
- Set stop loss below the current low of the market
- Exit long/take profit when the indicator value turns negative
MACD Colored Indicator: Sell Conditions
- The indicator bars turn red carrying a negative value
- Sell triggers after 3 consecutive red bars are formed
- Set stop loss above the current high of the market
- Exit short/take profit when the indicator value turns positive