On this tutorial, I am going to show you how to trade divergence using MACD colored histogram indicator. MACD is a powerful Forex indicator that can tell you current trend and possibly trend reversal. On this tutorial, I am focus on hidden divergence which in theory this phenomenon will continue the current trend. If current trend is down and you spot hidden divergence then it will continue to down trend. See example below.
Explanation:
On the picture above, price making lower high but the indicator (stochastic and MACD) showing the opposite. Those indicators make higher high. This condition is known as hidden divergence. As a result, the price continue to move down and makes new lower low. It’s a high probability setup since we go with the trend and its more safe.
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