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The Traditional MACD Indicator is one of the most essential tools in technical analysis. This MT4 Currency Strength indicator, helps identify trend direction, price momentum, and buy/sell signals for trading decisions.
The Traditional MACD, a classic version of this tool, incorporates two moving averages and the histogram. Signals are generated based on divergences and the relative position of moving averages to the histogram, allowing traders to determine trend direction more effectively.
Specifications of the Traditional MACD Indicator
The following table provides an overview of the key specifications of the Traditional MACD Indicator:
| Category | Oscillator - Signal & Forecast - Currency Strength |
| Platform | MetaTrader 4 |
| Skill Level | Beginner |
| Indicator Type | Reversal - Leading |
| Time Frame | Multi-Timeframe |
| Trading Style | Scalping - Day Trading - Intraday Trading |
| Markets | Forex - Cryptocurrencies – Indices |
Buy Signal
The following chart highlights the divergence between candlesticks and the MACD histogram using indicator lines. The image shows that while the price forms lower lows, the histogram prints higher lows.
Furthermore, the moving average lines cross above the histogram and oscillate in the positive phase, confirming a bullish setup.
Sell Signal
Based on the EUR/USD chart in the 1-hour timeframe, the price forms a higher high, while the histogram prints a lower high. Additionally, the moving average lines position themselves below the histogram levels.
In this scenario, the divergence between the indicator and price serves as a sell signal for shorting opportunities.
Traditional MACD Indicator Settings
The settings for the Traditional MACD Indicator are as follows:
- FAST_EMA: Configures the period for the fast-moving average calculations
- SLOW_EMA: Configures the period for the slow-moving average calculations
- SIGNAL: Calculates the signal line
- LOOKBACK_LIMIT: Defines the number of past candlesticks used for indicator calculations
- DIVERGENCE_LINES: Enables the divergence lines to be displayed on the chart
Conclusion
The Traditional MACD Indicator is a valuable tool for identifying divergences, trend reversals, and optimal trade entries.
This MT4 oscillator displays hidden divergences between candlesticks and histograms and helps track trend direction changes using moving average lines.
Which markets is the Traditional MACD Indicator suitable for?
This indicator can be used across all financial markets, including Forex, cryptocurrencies, and indices.
Can this indicator be used on lower time frames?
Yes, the Traditional MACD supports multi-timeframe analysis, making it applicable to all timeframes, including lower ones.