The CCI Divergence forex indicator for Metatrader 4 displays divergences between price and the CCI technical indicator.
A green CCI divergence arrow on the chart indicates that a bullish divergence has occurred between price and CCI.
A red CCI divergence arrow on the chart indicates that a bearish divergence has occurred between price and CCI.
CCI divergences are used to identify market trend reversals across all time frames.
To make an informed trade decision, always confirm CCI divergence trades with other technical tools (indicators, price action,..).
The default CCI period is set to 20 but can be modified from the indicator’s inputs tab.
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Indicator Chart (USD/CHF H1)
The USD/CHF 1-Hour chart below displays the CCI Divergence Metatrader 4 Forex indicator in action.
Basic Trading Signals
Signals from the CCI Divergence MT4 forex indicator are easy to interpret and goes as follows:
Buy Signal: Go long when a green CCI divergence arrow appears on the chart. Confirm the long trade with other analysis tools.
Buy Scalp: Go short when a red CCI divergence arrow appears on the chart. Confirm the short trade with other analysis tools.
Trade Exit: Use your own method of trade exit.
CCI Divergence Indicator + Ultimate Moving Average Forex Strategy for MT4
This MT4 strategy combines the CCI Divergence Indicator with the Ultimate Moving Average Indicator to create a reliable trend-following forex strategy.
The CCI Divergence Indicator identifies potential reversals with green divergence arrows for buy signals and red divergence arrows for sell signals.
The Ultimate Moving Average confirms the overall trend direction: when the price is above the MA, the trend is bullish; when below, the trend is bearish.
By combining reversal signals with trend confirmation, traders can enter high-probability trades in the direction of the dominant trend.
Buy Entry Rules
- Ensure the price is positioned above the Ultimate Moving Average to confirm a bullish trend.
- Wait for a green divergence arrow to appear on the CCI Divergence Indicator.
- Open a buy position at the close of the candle that forms the green divergence arrow.
- Set the stop loss just below the most recent swing low or a nearby support level.
- Close the trade when a red divergence arrow appears or if the price closes below the Ultimate Moving Average, signaling a potential trend reversal.
Sell Entry Rules
- Ensure the price is positioned below the Ultimate Moving Average to confirm a bearish trend.
- Wait for a red divergence arrow to appear on the CCI Divergence Indicator.
- Open a sell position at the close of the candle that forms the red divergence arrow.
- Set the stop loss just above the most recent swing high or a nearby resistance level.
- Close the trade when a green divergence arrow appears or if the price closes above the Ultimate Moving Average, signaling a potential trend reversal.
Advantages
- Combining divergence signals with trend confirmation increases trade accuracy.
- Works on multiple timeframes and currency pairs, making it versatile for different trading styles.
- Allows traders to capture trend continuation after a reversal signal.
- Dynamic take profit based on divergence or MA reversal helps lock in profits efficiently.
- Can be combined with support and resistance levels for stronger entries.
Drawbacks
- Requires monitoring of both indicators for accurate entries and exits.
- Lower timeframes may have more noise, leading to quicker stop-outs.
- Traders must be disciplined in waiting for proper confirmation from both indicators before entering a trade.
Example Case Study 1 – EUR/USD M15
During the London session, EUR/USD was above the Ultimate Moving Average, indicating a bullish trend.
A green divergence arrow appeared at 1.0875.
A buy trade was entered at 1.0875 with a stop loss at 1.0865.
Price moved upward and the trade was closed at 1.0890 when a red divergence arrow appeared, capturing 15 pips.
Example Case Study 2 – GBP/JPY M30
GBP/JPY on the M30 chart during the New York session was below the Ultimate Moving Average, indicating a bearish trend.
A red divergence arrow appeared at 152.35.
A sell trade was entered at 152.35 with a stop loss at 152.50.
Price moved downward and the trade was closed at 152.10 when a green divergence arrow appeared, capturing 25 pips.
Strategy Tips
- Focus on higher-probability trades where the divergence arrow aligns with a strong MA trend.
- Use this strategy on liquid pairs to reduce slippage and improve execution.
- Consider using additional confirmation from candlestick patterns to strengthen entries.
- Be patient and wait for clear divergence signals aligned with the trend instead of trading every signal.
- Adjust stop loss and take profit levels dynamically according to recent market swings rather than fixed pip targets.
Download Now
Download the “cci-divergence.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: Chart pattern indicator
Customization options: Variable (CCI period, positive sensitivity, negative sensitivity) Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: divergence
