MACD Divergence Trading Strategy

[autoforex]

Features:

• Easy to spot signals.
• Only one standard indicator used.
• Good profit potential on positions.
• Take-profit and stop-loss levels are rather indefinite.
• Rare occurrence on the long-term charts.

Strategy Set-Up:

1. Any currency pair and timeframe should work. But shorter timeframes are recommended, as they yield more opportunities.
2. Add MACD (Moving Average Convergence/Divergence) indicator to the chart, set Fast EMA period to 12, Slow EMA period to 26 and MACD SMA to 9; apply to Close.

Entry Conditions:

Enter Long position when the price shows a bearish trend and MACD indicator shows a bullish trend.
Enter Short position when the price shows a bullish trend and MACD indicator shows a bearish trend.

Exit Conditions

Set stop-loss to the nearby support level, when going Long, or to the nearby resistance level, when going Short.
Set take-profit to the next resistance level for Long positions, or to the next support level for Short positions.
If the system generates a reversal signal — close the previous position first.

Source:
http://www.forexforexmarkettrading.com/2011/07/macd-divergence-trading-strategy.html