Recently, I’ve been practicing trading forex using MACD divergence, coupled with price action…. results have been pretty good so far… A quick glance at any chart will easily reveal that MACD divergence is a reasonably reliable pattern, with a high probability of success… When this pattern is combined with price action, the chance of success is even higher… Personally, I love it when a Pinocchio bar or an Engulfing bar appears in conjunction with a MACD divergence…. chances of the trade being profitable is very high when that happens….
A Profitable MACD Divergence Trade
However, like any other trading strategy, MACD divergence will give false signals as well, especially when the market is strongly trending, and reversals are too short-lived to be profitable… I’m not sure how I can filter out such false signals without filtering out the profitable ones as well… I think a better way may be to focus less on the entry, but more on the exit… Since I entered the trade using price action, a good way to exit will be to use price action as well…. For instance, if after buying a pair, some bearish price action is formed on the chart, I can consider exiting part of my positions first to limit my risk…
A Non-Profitable MACD Divergence Trade
