About the OsMA Divergence Indicator
The OsMA Divergence Indicator for MT4 is designed to detect bullish and bearish divergences between price action and the OsMA oscillator.
OsMA, short for Oscillator of a Moving Average, measures the distance between a MACD line and its signal line.
This difference helps traders spot momentum shifts that are not always visible on the price chart alone.
By comparing price highs and lows with OsMA behavior, the indicator highlights potential trend exhaustion points.
These situations often appear before a reversal or a deeper pullback takes place.
Instead of forcing entries, the indicator focuses on timing areas where probability starts to shift in favor of a new move.
The OsMA Divergence Indicator plots divergence lines directly on the main MT4 chart.
This makes it easy to align divergence signals with support, resistance, and existing market structure.
It works across all currency pairs and time frames and can be used as a standalone reversal tool or as confirmation within a broader trading plan.
Free Download
Download the “OsMA_Divergence_v1.mq4” indicator for MT4
Key Features
- Automatically detects bullish and bearish divergences between price and OsMA.
- Plots divergence signals directly on the main chart window.
- Helps identify potential trend reversals and momentum loss.
- Useful for both discretionary trading and rule-based strategies.
Indicator Chart
The OsMA Divergence Indicator chart shows divergence lines drawn between price swings and the OsMA oscillator.
Bullish divergence appears when price makes a lower low while OsMA forms a higher low.
Bearish divergence appears when price makes a higher high while OsMA forms a lower high.
These signals help traders anticipate possible changes in trend direction or corrective moves.
Guide to Trade with the OsMA Divergence Indicator
Buy Rules
- Look for a bullish divergence marked on the chart.
- Confirm that the price is approaching a support zone or slowing down.
- Enter a buy trade once the price starts to stabilize or shows rejection.
Sell Rules
- Wait for a bearish divergence to appear on the chart.
- Confirm that the price is near resistance or losing upward momentum.
- Enter a sell trade after the price shows hesitation or reversal behavior.
Stop Loss
- Place the stop beyond the most recent swing high or swing low.
- Allow enough room for normal price fluctuations.
- Exit the trade if price invalidates the divergence setup.
Take Profit
- Target the next significant support or resistance level.
- Secure profits gradually as price moves in your favor.
- Close the trade if momentum fades or an opposite divergence forms.
OsMA Divergence + CCI Histogram MT4 Scalping Strategy
This strategy uses the OsMA Divergence indicator to spot hidden or regular divergences between price and OsMA.
The CCI Histogram indicator gives trend momentum via blue (bullish) or red (bearish) histogram bars.
The idea is to enter on divergence that aligns with momentum from CCI, giving higher-probability scalps.
The CCI Histogram displays blue bars when the CCI trend is bullish, red bars when it’s bearish, and gray bars when flat.
Use it alongside price structure and divergence to confirm entries rather than trading solely on its signals.
Buy Entry Rules
- Look for a bullish divergence between price and OsMA (price making a lower low while OsMA makes a higher low).
- The OsMA Divergence indicator should plot its divergence red signal (often a line or marking).
- Confirm that the CCI Histogram is blue (indicating bullish momentum).
- Enter a buy at the close of the candle after the divergence is confirmed and the histogram turns blue (or remains blue).
- Stop loss: place below the recent swing low (or the swing low involved in the divergence), with a small buffer of a few pips.
- Take profit: aim for 1× to 1.5× your risk, or exit when the CCI Histogram turns red or when a reversal divergence appears on OsMA.
Sell Entry Rules
- Look for a bearish divergence between price and OsMA (price making a higher high while OsMA makes a lower high).
- The OsMA Divergence indicator should flag it.
- Confirm that the CCI Histogram is red (bearish momentum).
- Enter a sell at the close of the candle after confirmation of both divergence and the red histogram.
- Stop loss: place above the recent swing high (or high involved in divergence), with a small buffer.
- Take profit: aim for 1× to 1.5× risk, or exit when CCI Histogram turns blue or a bullish divergence appears.
Advantages
- Divergence gives early warning of potential reversals before the price fully reacts.
- The CCI Histogram helps you filter entries by momentum direction, reducing trades against trend.
- Works across multiple timeframes (M1, M5, M15) with the same logic.
- Scalping style keeps trade duration short, limiting exposure to sudden reversals.
Drawbacks
- Divergences sometimes fail or lag in strong trending markets—price might continue strongly despite divergence.
- The CCI Histogram may flip prematurely during choppy conditions, causing whipsaws.
- Scalping profit margins may be eaten by spreads and slippage, especially on smaller pairs or off-peak hours.
Case Study 1: EURUSD on M5
During the London session, the price created a lower low, while OsMA showed a higher low (bullish divergence).
The OsMA Divergence indicator flagged this.
Shortly after, the CCI Histogram turned blue.
A buy was entered at 1.1245. Stop loss was placed below the swing low at 1.1235 (10 pips).
Price climbed, and the target was hit at 1.1255 (10 pips). The histogram remained blue until exit.
Case Study 2: GBPUSD on M15
In the New York session, GBPUSD made a higher high, while OsMA registered a lower high (bearish divergence).
The divergence marker appeared. The CCI Histogram was red, confirming bearish momentum.
A sell was entered at 1.3108. Stop loss placed at 1.3120 (12 pips).
Price moved quickly downward, reaching 1.3095, triggering the take profit of 13 pips.
Exit was prompted by divergence resolution or histogram flipping.
Strategy Tips
- Use pairs with tight spreads and good liquidity to reduce slippage—EURUSD, GBPUSD, USDJPY are strong options.
- Prefer to trade in active sessions (London, New York) where momentum is stronger and divergences are more meaningful.
- Don’t force trades if divergence is weak or the histogram is ambiguous—wait for clean signals.
- Combine with basic support/resistance zones to strengthen your entries and exits.
- Consider scaling out: for example, take half the profit at 1× risk, let the remaining position run until the exit condition triggers.
- Backtest over several months to gauge win rate, average pip gain, and adjust your risk parameters accordingly.
Download Now
Download the “OsMA_Divergence_v1.mq4” indicator for Metatrader 4
FAQ
What type of signals does the OsMA Divergence Indicator provide?
The indicator focuses on divergence-based reversal signals.
It highlights situations where momentum no longer confirms price movement.
Is this indicator better suited for trending or ranging markets?
It performs best in trending markets where momentum begins to weaken.
Divergence signals often appear near the end of extended moves.
Can OsMA Divergence be used on lower time frames?
Yes, it works well on lower time frames for intraday trading.
Higher time frames may offer fewer signals but stronger reversals.
Should divergence be traded on its own?
While it can be traded independently, combining it with price action or key levels can improve decision-making.
Summary
The OsMA Divergence Indicator for MT4 is a focused tool for spotting momentum-based reversal opportunities.
By comparing price behavior with the OsMA oscillator, it reveals shifts that often precede changes in direction.
Its on-chart display keeps analysis simple and aligned with price structure.
The indicator is flexible, easy to integrate, and suitable for traders who value timing and confirmation.
With disciplined execution and thoughtful trade management, OsMA Divergence can become a reliable component of a reversal-focused trading approach.
