Divergence is one of the trading techniques used by many traders. In which there are 2 types of Divergence which are Regular Divergence and Hidden Divergence. Divergence is often used to identify reversal signals, while Hidden Divergences are mainly used for trend trading.

Indicators used to identify Divergence signals are mainly oscillating indicators such as RSI, MACD, CCI, Stochastic, ... However, many traders can also rely on price action to receive know the Divergence, but it is best to use the indicator to get the correct signal.

In fact, the oscillator often gives divergence signals, so identifying the quality divergence signals in those signals is not easy. Not to mention that the trader also misidentifies the Divergence signal. That is also the reason why trading with Divergence is not effective.

This indicator is named Fx5 Divergence. This Indium will help you automatically plot the Divergence signals available on the price chart. After installing the indicator, our chart will have the interface as shown below:


Looking at the chart above you can see, this indicator automatically identifies the top-bottom and signal divergence for us. The rest of the brothers that is to determine the quality signal to participate in the trading. About using divergence signals to trade, I do not need to explain much to you anymore. Now, will share with everyone how to apply the divergence signals this indium provides to strategy trading.

Before going to the rules of the transaction, you should note a few things:
  • Timeframe: H1 and above
  • Currency pair: Any
  • Technical indicators: SMA 9, SMA 100, FX5 Divergence, Pivot indicator.
2 indicators Fx5 Divergence and Pivot attached below the article.

Note
  • The two main indicators to identify a trend are SMA 9 and SMA 100. When SMA 9 is above SMA 100, it indicates an uptrend, and vice versa, SMA 9 is below SMA 100, which indicates a downtrend.
  • FX5 Divergence indicator to identify trading signals. If the red bar is below the zero lines then the down arrow is a sell signal. If the green bar is above the zero lines then the up arrow is a buy signal. As shown below:

Trading principles

For sale trading
  • The market must be in a downtrend
  • Fx5 Divergence for a sell signal

For purchases
  • The market must be in a downtrend
  • Fx5 Divergence for the buy signal

Exit signal
  • Exit commands by pivot
  • Profit target is around 18-25 pips
  • Stop loss at the previous bottom