Sniper MACD Trend Divergence Forex Trading Strategy – MT5
<p>Trends and reversals are two opposing concepts when it comes to technical trading. At first glance, it might seem that strategies related to a trending market are polar opposites of strategies intended for a market reversal scenario. However, if you would look closely and observe how the market behaves in a price chart, you would notice that these two scenarios that seems like total opposites do synergize. This is because trends and reversals occur on different time horizons.</p>
<p>If you would observe a price chart of a trending market closely, you would notice that although the market moves in the general direction of the trend, there are minor oscillations that occur within the trend. Price action may bob up and down even though the market is in an uptrend or a downtrend. These minor oscillations are also reversals that occur on a shorter time horizon. In fact, if you would zoom in on a lower timeframe, these could be considered as a full trend reversal.</p>
<p>Considering that price action may have minor oscillations within a trend, it is possible to trade a reversal setup based on these minor oscillations while still conforming to the general trend direction. Let us look into a strategy which does this using long-term moving average lines to indicate the long-term trend and divergences and minor trendline breakouts to anticipate possible reversal setups.</p>
<h2><strong>Hidden Divergences</strong></h2>
<p>Divergences are scenarios that occur in the market wherein there is a discrepancy with the intensity of the dips and pulses that occur on the price chart with that reflected on its corresponding oscillator indicator.</p>
<p>Price action normally oscillates up and down. These oscillations create swing highs and swing lows. Oscillators typically mimic the movement of price action although with a little lag and a muted intensity when it comes to its swings. However, the peaks and troughs on the oscillator would usually mirror the intensity of the peaks and troughs from the price chart. Divergences occur when there is a discrepancy of depth or height between the peaks and troughs from price action and that of the oscillator.</p>
<p>Below is a chart showing the various types of divergences to help you visualize what these discrepancies would look like.</p>
<p><img class="size-full wp-image-65317 aligncenter" src="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Divergences-Cheat-Sheet.png" alt="Divergences Cheat Sheet" width="864" height="977" srcset="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Divergences-Cheat-Sheet.png 864w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Divergences-Cheat-Sheet-265x300.png 265w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Divergences-Cheat-Sheet-768x868.png 768w" sizes="(max-width: 864px) 100vw, 864px" /></p>
<p>Hidden divergences are unique because it typically agrees with the direction of the long-term trend. It also usually occurs whenever there is a deep retracement which are excellent trend continuation trading opportunities. As such, we will be trading hidden divergences.</p>
<h2><strong>Sniper MACD</strong></h2>
<p>MACD stands for Moving Average Convergence and Divergence. The classic MACD is a momentum technical indicator based on the concept of the crossing over of moving average lines and is an oscillator type of technical indicator. It computes for the difference between two Exponential Moving Average (EMA) lines and plots the result either as a MACD line or histogram. It also computes for a signal line, which is a Simple Moving Average (SMA) of the MACD line. Positive MACD lines indicate a bullish trend bias, while negative MACD lines indicate a bearish trend bias. Crossovers between the MACD line and its corresponding signal line indicate a possible trend reversal.</p>
<p>The Sniper MACD is a variation of the classic MACD which uses settings that smoothens out the oscillations of the MACD line and the signal line while trying to maintain its sensitivity to price action pulses.</p>
<p>Since the Sniper MACD is a smoothened yet responsive oscillator indicator it would be an excellent source of divergence signals. We will be using this indicator as a basis for the potential strong reversals based on hidden divergences. The crossovers of the MACD line and its signal line would also serve as a confirmation of the reversal signal.</p>
<p><img class="alignnone size-full wp-image-65316" src="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5.png" alt="Sniper MACD Trend Divergence Forex Trading Strategy - MT5" width="977" height="672" srcset="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5.png 977w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5-300x206.png 300w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5-768x528.png 768w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5-218x150.png 218w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5-436x300.png 436w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Sniper-MACD-Trend-Divergence-Forex-Trading-Strategy-MT5-100x70.png 100w" sizes="(max-width: 977px) 100vw, 977px" /></p>
<h2><strong>100 EMA and 200 SMA Lines</strong></h2>
<p>The 100 and 200-period moving average lines are widely used moving averages for determining the long-term trend. Traders typically identify trend direction based on where price is in relation to moving average lines, as well as the slope of the moving average lines.</p>
<p>We will use the Simple Moving Average (SMA) method for the 200 moving average line since it is less susceptible to price spikes and tends to hold the trend indication longer. As for the 100 moving average line, we will be using the Exponential Moving Average (EMA) method as it tends to coincide with the short-term trend on the higher timeframes and it is also the area where price action retraces to before it bounces back.</p>
<p>We will also add the relationship of the 100 EMA line to the 200 SMA line to confirm trend direction based on where the 100 EMA line is in relation to the 200 SMA line.</p>
<p><img class="alignnone size-full wp-image-65315" src="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines.png" alt="100 EMA and 200 SMA Lines" width="977" height="672" srcset="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines.png 977w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines-300x206.png 300w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines-768x528.png 768w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines-218x150.png 218w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines-436x300.png 436w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/100-EMA-and-200-SMA-Lines-100x70.png 100w" sizes="(max-width: 977px) 100vw, 977px" /></p>
<h2><strong>Retracement Support and Resistance</strong></h2>
<p>Price action often form a slow diagonally moving structure whenever it retraces. This tight diagonally moving retracement structure often forms a minor support or resistance line. As the market contraction phase on the retracement ends price action typically breaks these support or resistance lines before it gains momentum as it pulses in the direction of the trend. We will use these breakouts as a confirmation of our trade setup.</p>
<h3><strong><em>Bullish Sniper MACD Trend Divergence Setup</em></strong></h3>
<ul>
<li>The 100 EMA line should be above the 200 SMA line.</li>
<li>Price action should be above the 100 EMA and 200 SMA lines.</li>
<li>Price action should retrace towards the 100 EMA line.</li>
<li>A minor resistance line should be observable during the retracement.</li>
<li>A hidden bullish divergence should also be observable when paired with the Sniper MACD.</li>
<li>Enter a buy order as the MACD line crosses above the signal line and price action breaks above the minor resistance line.</li>
<li>Set the stop loss at the support level below the entry candle.</li>
<li>Close the trade as soon as price action shows signs of reversing.</li>
</ul>
<p><img class="alignnone size-full wp-image-65314" src="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance.png" alt="Retracement Support and Resistance" width="977" height="672" srcset="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance.png 977w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance-300x206.png 300w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance-768x528.png 768w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance-218x150.png 218w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance-436x300.png 436w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Retracement-Support-and-Resistance-100x70.png 100w" sizes="(max-width: 977px) 100vw, 977px" /></p>
<h3><strong><em>Bearish Sniper MACD Trend Divergence Setup</em></strong></h3>
<ul>
<li>The 100 EMA line should be below the 200 SMA line.</li>
<li>Price action should be below the 100 EMA and 200 SMA lines.</li>
<li>Price action should retrace towards the 100 EMA line.</li>
<li>A minor support line should be observable during the retracement.</li>
<li>A hidden bearish divergence should also be observable when paired with the Sniper MACD.</li>
<li>Enter a sell order as the MACD line crosses below the signal line and price action breaks below the minor support line.</li>
<li>Set the stop loss at the resistance level above the entry candle.</li>
<li>Close the trade as soon as price action shows signs of reversing.</li>
</ul>
<p><img class="alignnone size-full wp-image-65313" src="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup.png" alt="Bearish Sniper MACD Trend Divergence Setup" width="977" height="672" srcset="https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup.png 977w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup-300x206.png 300w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup-768x528.png 768w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup-218x150.png 218w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup-436x300.png 436w, https://www.forexmt4indicators.com/wp-content/uploads/2020/12/Bearish-Sniper-MACD-Trend-Divergence-Setup-100x70.png 100w" sizes="(max-width: 977px) 100vw, 977px" /></p>
<h2><strong>Conclusion</strong></h2>
<p>Trading divergences based on MACD is a working trading strategy which many traders use. For best results, it should be a version of the MACD which has less lag compared to the classic MACD, which is what the Sniper MACD is, although there are also other versions of the MACD with less lag.</p>
<p>What differentiates traders who use this type of strategy is their skill in managing trades. Some would hold on to trades too long only to find price reversing on their profits. Some would close the trade too early even when there is still profits to be made. Some would remedy this by setting a fixed take profit target. While some would use the MACD as the basis for their trade exits which is sometimes either too early or too late. Practice this strategy first and modify your exit strategy depending on what suites you best.</p>
<p><h3><span><strong><br />
Forex Trading Strategies Installation Instructions</strong></span></h3>
<p>Sniper MACD Trend Divergence Forex Trading Strategy – MT5 is a combination of Metatrader 5 (MT5) indicator(s) and template.</p>
<p>The essence of this forex strategy is to transform the accumulated history data and trading signals.</p>
<p>Sniper MACD Trend Divergence Forex Trading Strategy – MT5 provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.</p>
<p>Based on this information, traders can assume further price movement and adjust this strategy accordingly.</p>
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<h3><strong>How to install Sniper MACD Trend Divergence Forex Trading Strategy – MT5?</strong></h3>
<ul>
<li>Download Sniper MACD Trend Divergence Forex Trading Strategy – MT5.zip</li>
<li>*Copy mq5 and ex5 files to your Metatrader Directory / experts / indicators /</li>
<li>Copy tpl file (Template) to your Metatrader Directory / templates /</li>
<li>Start or restart your Metatrader Client</li>
<li>Select Chart and Timeframe where you want to test your forex strategy</li>
<li>Right click on your trading chart and hover on “Template”</li>
<li>Move right to select Sniper MACD Trend Divergence Forex Trading Strategy – MT5</li>
<li>You will see Sniper MACD Trend Divergence Forex Trading Strategy – MT5 is available on your Chart</li>
</ul>
<p><span><em>*Note: Not all forex strategies come with mq5/ex5 files. Some templates are already integrated with the MT5 Indicators from the MetaTrader Platform.</em></span></p>
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