Trend Reversals can be predicted in many different ways. The following indicator shows two types of possible reversal points:
1. Regular MACD Divergences
The MACD Divergence indicator shows zones of divergence, which can be useful in multi-time-frame contexts, and possible entry points within these divergence zones. Unlike other divergence indicators, the fractals of price and MACD line only consider time-synchronised fractals thereof, thus improving reliability of the entry signals. Typically, Long entry points tend to have a higher probability of entering a successful trade than short entry points.
2. Unique MACD / RSI pattern in combination with breaks of previous Support & Resistance lines
My own creation is based on a combination of a unique MACD and RSI pattern, which has to occur after a break of a significant previous Support or Resistance price level, which acts as a filter of the MACD / RSI entry points, in order to increase the probability of success.
Below are two screen shots, showing good examples of both reversal types. The yellow entry points are MACD Divergence entry points, the green entry points are the MACD / RSI / Support & Resistance combination entry points. All other colours of arrows show coincidence of both reversal types. One example is marked with a circle in below screen shots.
Please do note that one can achieve useful results on very small time frames, such as one minute, and also longer ones, such as one hour or more.
Multi-time-Frame analysis is a useful approach to increase chances of success.
As always, proper management of risk and reward is essential for successful trading in order to cope with false entry signals not yielding a profitable position exit.
This indicator is available as a compiled file for 50,- EURO upon request which you can send to smarttradingapps@gmail.com.
Risk Disclaimer
Trading Foreign Exchange (Forex), Contracts For Difference (CFDs), or other financial products, carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading, and seek advice from an independent financial advisor if you have any doubts.
The author of this document expressly disclaims all liability for the use, or interpretation by others, of information and computer codes referenced in this document. Decisions based on information contained herein are the sole responsibility of the visitor, and in exchange for using the information contained in this website the visitor agrees to hold the owner of the website and its affiliates harmless against any claims for direct, or indirect, damages for decisions made by the visitor based fully or partially on such information.
User of computer codes referenced as “Smart Trading Apps” and "Indicator" are strongly advised to try these out on a demo account first, to learn how to correctly use them, and to verify the expected functionality. The author of this document expressly disclaims all liability for the use of these computer codes.
Trading Foreign Exchange (Forex), Contracts For Difference (CFDs), or other financial products, carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading, and seek advice from an independent financial advisor if you have any doubts.
The author of this document expressly disclaims all liability for the use, or interpretation by others, of information and computer codes referenced in this document. Decisions based on information contained herein are the sole responsibility of the visitor, and in exchange for using the information contained in this website the visitor agrees to hold the owner of the website and its affiliates harmless against any claims for direct, or indirect, damages for decisions made by the visitor based fully or partially on such information.
User of computer codes referenced as “Smart Trading Apps” and "Indicator" are strongly advised to try these out on a demo account first, to learn how to correctly use them, and to verify the expected functionality. The author of this document expressly disclaims all liability for the use of these computer codes.
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