Divergences with EMA 200 Strategy

Powerful Divergence Indicator For Scalping (High Winrate Strategy)

2 minutes, 5 seconds Read

This one is called the Divergence For Many Indicators V4 by LoneSomeTheBlue, be sure to add it to your collection.

Divergence For Many Indicators v4

This tool basically checks every single candle for different divergencies. The indicators it searches divergencies on, MACD, RSI, MACD Histogram, Stochastic, CCI, Momentum, On Balance Volume, VWMACD and Chaikin Money Flow. Whenever the indicator spots a bullish divergence, a yellow label is printed on a chart, and whenever it spots a bearish divergence, it prints a dark blue label above the price. The more indicators it found divergence on the stronger the signal, some of these signals can be quite accurate, but I do not recommend using this tool on its own. So in order to dramatically increase the accuracy of these signals, let’s add the exponential moving average to the chart changes length from nine to 200.

Exponential Moving Averate (Length 200)

So having these two indicators on the chart, when do you think would be the best time to buy? In my opinion, the best time to buy would be when the market makes a pullback into the exponential moving average. So typically whenever the price action is moving above the EMA and then it pulls back into it, the market usually respects this price and makes a rejection. So if you have a bullish diversion on at least two indicators at a time, the pull back happens. This is a strong signal that the price will continue to go up. By adding the EMA to the chart, we also eliminated a lot of potential fake signals here. Set your stop loss slightly below the EMA and target at least two times the risk. We see the price respected the EMA, and we had a bullish diversion on 4 indicators.

EMA Pullback
EMA Pullback Long
EMA Fake Signals Eliminated

For short trades, wait for the price action to drop below the EMA. This is a confirmation of a trend change from bullish to bearish. Then wait for the pull back into the EMA and for the indicator to spot a bearish diversions on at least two indicators. Here’s another great example. For a short trade, we see the price action perfectly respected, the EMA and the indicator found a bearish diversion on MACD and VWMACD. So yeah, traders definitely give this indicator a try, and I’m sure it’s gonna make you a lot of money. Thanks for reading this trading strategy and see you in the next one.

EMA Pullback (Short Entries)
EMA Short Signal

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