Metatrader (MT4/MT5) Indicator
The Oscillator is a smooth and responsive accelerometer which reveals the market trend and strength, plus it can detect divergences automatically. It has been designed to complement all other products and it is great as a trading confirmation.
- Discover the power of divergence trading
- Two moving averages indicate trend direction
- The histogram represents short-term price momentum
- Find overbought / oversold situations using divergence lines
- Go with the trend using the oscillator as a confirmation
The Oscillator should be used as a confirmation indicator. Use the two moving averages to trade in the trend direction and divergences to find reversals.
- It finds regular and hidden divergences
- Customizable line widths and colors
- It implements email/sound/push alerts
Enhance your trading activity with the best and most complete oscillator and divergences indicator.
How to identify the trend
The oscillator plots two moving averages to display the trend direction. If the fast moving average is above the slow moving average, the market is during an uptrend and long trades can be taken. Likewise, if the fast moving average is below the slow moving average, the market is during a downtrend and short trades can be taken.
Other way to identify the market trend is by using the absolute value of the histogram. If the histogram value is above zero, the market is in an uptrend. If the histogram value is below zero, the market is in a downtrend.
How to identify the trend strength
The trend strength (or speed) is illustrated by the histogram. A blue bar stands for bullish momentum and a red bar stands for bearish momentum. What to do with this information at any given moment depends on the market trend. If bullish momentum appears during a downtrend, it means that the downtrend is exhausted and has stopped accelerating. Likewise, if bearish momentum appears during an uptrend, it means that the uptrend is exhausted and has stopped accelerating.
Automatic divergence detection
The oscillator auto-detects and plots regular and hidden divergences, and while all of them can be traded, they are not meant to be traded right away. To trade divergences successfully you have to put together the trend direction and strength, explained above. The following is the perfect situation for a bearish divergence:
- The fast moving average of the oscillator is above zero
- The oscillator displays an uptrend (fast ma > slow ma)
- The oscillator displays bearish momentum (red histogram)
- The oscillator detects a bearish divergence
Likewise, the following is the perfect situation for a bullish divergence:
- The fast moving average of the oscillator is below zero
- The oscillator displays a downtrend (fast ma < slow ma)
- The oscillator displays bullish momentum (blue histogram)
- The oscillator detects a bullish divergence
When one of these two scenarios is met, please don't enter the market automatically. You have to wait until a price action signal confirms that the market is ready to reverse. In other words, you must wait for the market to move first.
- ? FAQ
- Does the indicator repaint?
- The moving averages and the histogram do not repaint. Divergences, on the other hand, can repaint as the market distortion continues.
- Should I trade the divergences right away?
- No, you should not. Divergences can expand as long as they like. You should wait for the market to move first.
- I don't know how to interpret the histogram!
- The two moving averages represent the trend direction, and the histogram represents the trend strength by plotting the distance between the two moving averages. If the two moving averages are becoming closer to each other, the trend is slowing. Likewise, if the two moving averages are becoming farther from each other, the trend is accelerating. Whenever a trend is slowing down, you should tight your trailing stoploss and start looking for an exit point.
- How can I confirm trend trades with the oscillator?
- You can go long if the fast moving average is above the slow moving average, and the opposite for shorts.
- What are the alerts for?
- The indicator raises alerts when the trend changes or when a divergence is found.