MACD is short for moving average convergence/divergence, it is one of the most popular Metatrader 4 forex indicators and is used in a lot of forex trading strategies and trading systems.
The indicator is composed of two exponential moving averages and one simple moving average with a default period set to 9.
The MACD oscillator fluctuates above and below the zero level.
The trend is considered to be bullish when the MACD is trading above the zero line and considered to be bearish when it is trading below the zero line.
This indicator is used for scalping, day trading, swing trading and position trading.
It is used for all forex pairs including majors, cross pairs and exotics.
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Indicator Chart (EUR/USD H1)
The EUR/USD H1 chart below shows the MACD forex indicator in action.
Basic Trading Signals
MACD trading signals are simple to interpret and go as follows:
Buy Trade: Go long when the indicator trades above the zero level from below, trend changes from bearish to bullish.
Sell Trade: Go short when the indicator trades below the zero level from aboce, trend changes from bullish to bearish.
Tip: Sometimes the MACD indicator is also used to trade divergences between MACD and price.
MACD and Heiken Ashi Trend Signals Forex Day Trading Strategy
This MT4 day trading strategy blends the classic MACD MT4 indicator with the Heiken Ashi Trend Signals MT4 indicator to provide signals that help traders catch intraday trends with better timing.
The MACD indicator shows whether momentum is bullish or bearish based on whether it is above or below the zero level.
The Heiken Ashi Trend Signals indicator smooths price action so that a series of green candles indicate a bullish trend and a series of orange candles indicate a bearish trend.
When both indicators align, day traders get confirmation that price movement is likely to continue in the same direction.
This strategy is ideal for active day traders using M5, M15, and M30 charts, especially on highly liquid currency pairs such as EURUSD, GBPUSD, and USDCHF.
By combining momentum and trend, traders can enter with greater confidence and ride intraday moves while the conditions remain favorable.
Buy Entry Rules
- Ensure the MACD histogram and line are above the zero level, indicating bullish momentum.
- Confirm that a series of Heiken Ashi green candles is forming, showing a bullish trend.
- Enter a buy trade at the close of the candle where both MACD and Heiken Ashi conditions align.
- Place the stop loss below the most recent swing low or below the last Heiken Ashi red/orange candle low.
- Exit the trade when the MACD drops below zero or when a series of Heiken Ashi orange candles appears.
Sell Entry Rules
- Ensure the MACD histogram and line are below the zero level, indicating bearish momentum.
- Confirm that a series of Heiken Ashi orange candles is forming, showing a bearish trend.
- Enter a sell trade at the close of the candle where both MACD and Heiken Ashi conditions align.
- Place the stop loss above the most recent swing high or above the last Heiken Ashi green candle high.
- Exit the trade when the MACD rises above zero or when a series of Heiken Ashi green candles appears.
Advantages
- Combines momentum and trend signals to reduce false entries.
- Works well on multiple intraday timeframes, giving flexibility to different day trading styles.
- Heiken Ashi smoothing reduces market noise and helps spot clearer trends.
- MACD provides objective confirmation of underlying momentum before entry.
- Defined exit conditions help protect profits and limit losses.
Drawbacks
- Can give delayed entries during rapid market moves since both indicators must align.
- Sideways or range-bound markets may produce multiple false signals.
- Requires active monitoring during the trading session to manage trades and exits.
- Moderate pip targets demand discipline and consistent execution.
- May result in smaller gains if the trend weakens before hitting ideal take profit levels.
Example Case Study 1
On the M15 EURUSD chart during a morning London session trend, the MACD remained above zero, indicating bullish momentum.
A series of Heiken Ashi green candles formed as the price continued upward.
A buy trade was entered at the close of the confirming candle with the stop loss placed below the recent swing low.
Price continued higher as both indicators stayed aligned.
The trade was closed when the MACD dropped below zero in the later session.
The trade captured 55 pips during this active intraday move.
Example Case Study 2
On the M5 GBPCHF chart during a midday session, the MACD dipped below zero, showing bearish momentum.
Heiken Ashi showed a sequence of orange candles confirming the downtrend.
A sell trade was entered at candle close with the stop loss placed above the most recent swing high.
Price continued dropping with aligned indicators.
The trade was closed when Heiken Ashi began showing green reversal candles.
This trade captured 27 pips during this short trend continuation move.
Strategy Tips
- Check the higher timeframe trend (H1) before trading on lower timeframes to improve signal reliability.
- Wait for both MACD and Heiken Ashi conditions to clearly align before entering a trade to avoid early entries.
- Use well defined support and resistance areas to improve entry timing and risk management.
- Manage risk by keeping positions small relative to account size and move stop to breakeven when possible.
- Exit promptly when indicators flip to preserve gains and avoid larger reversals.
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Download the “MACD.mq4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart pattern indicator
Customization options: Variable (Fast EMA Period, Slow EMA Period, Signal SMA Period) Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: Oscillator
