Free Forex Indicators (MT4), Trend Following Indicators

Stochastic Divergence Indicator for MT4

The Stochastic Divergence Indicator identifies the irregular reactions between the price and the Stochastics curve and transforms them to speculate the following market trend direction.

When it comes to divergence trading, traders usually name RSI and MACD as their favorite tool for determining the price divergences. However, the Stochastics indicator also offers effective divergence signals, especially those seeking swing trading opportunities in shorter timeframes.

Stochastic Divergence Indicator for MT4 Overview

The Stochastic Divergence Indicator points trend reversals by plotting trendlines in both price chart and indicator window. It enables you identify the opposite price-actions compared to the stochastics movements in naked eyes.

Stochastic Divergence Indicator overview

However, as a beginner, traders may find it hard to spot the peculiar price movements manually. Thankfully, the indicator generates arrow signals confirming the bullish/bearish divergences so that traders can speculate the price reversals more conveniently.

Stochastic Divergence Indicator for MT4 Explanation

Stochastic Divergence Indicator for MT4 1

A divergence occurs when the price moves oppositely to the Stochastics curve. For instance, the price makes a lower low, and the Stochastics plots a higher low indicates a bullish divergence. A blue arrow is pointing upwards in the indicator window signals for a bullish divergence.

While anticipating divergence trades, we also need to consider the Stochastics value for filtering the trade signals and minimizing market noise. For example, Stochastics at 80 means the market is oversold. Therefore, considering a bearish divergence to go short in an oversold market offers a greater success probability.

Also read: Exness Review – Is it The Best Forex Broker?

Stochastic Divergence Indicator for MT4: Buy Conditions

Stochastic Divergence Indicator buy signal
  • A blue arrow appears in the indicator window pointing upwards to signal a bullish divergence
  • The Stochastics value remains near 20, indicating an oversold market condition
  • Exit long when the price gets restricted by a trendline or horizontal resistance

Stochastic Divergence Indicator for MT4: Sell Conditions

Stochastic Divergence Indicator sell signal
  • The indicator plots a red arrow signaling a bearish divergence
  • The stochastics value roams around 80 suggesting an overbought market
  • Exit short after the price rejects to move below a trendline or horizontal support

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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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