Knoxville Divergence Indicator
Knoxville Divergence indicator for MT4 plots forex reversal trading signals using divergence of Momentum and RSI indicator.
Description
The Knoxville divergence indicator for MT4 combines two classic indicators, the RSI – Relative Strength Index and the Momentum Indicator. The primary objective of the indicator is to identify divergence and convergence using the momentum and the RSI values. To identify reversals, the indicator combines the divergence in momentum and price movement with oversold and overbought RSI values. So, the indicator provides an early alert for bullish and bearish trend reversals. As a result, forex traders can use the indicator to BUY and SELL accordingly.
The indicator works well on all intraday price charts and the daily, weekly, and monthly price charts. Moreover, the indicator is best suited for new and advanced forex traders. New forex traders can use the reversal signals and place the trades accordingly. On the other hand, advanced forex traders can combine the indicator with other technical tools and trade in confluence with them. Additionally, forex traders can download the indicator for free and install it easily.
Knoxville Divergence Indicator For MT4 Trading Signals
The above EURUSD, H1 price chart, shows the Knoxville divergence indicator for MT4 in action. The indicator plots the divergence lines on the price chart in Black color.
The trading signals produced by the indicator are derived from the price momentum and the oversold and overbought levels. These levels are transformed as buy and sell trading signals. The indicator places the Black signal lines above the candles for a SELL signal and below the candles for BUY signals.
If the indicator places a black line below the candles, it indicates a bullish reversal signal. So, forex traders should enter the markets with a BUY position with a stop loss below the previous swing low. The indicator does not provide a potential price target for booking profits. So, forex traders should book profits with a good risk to reward ratio or apply additional methods to identify the best profit targets.
Similarly, if the indicator places a line above the candle, it shows the potential bearish price reversal signal. So, traders can place a SELL trade with a stop loss above the previous swing high.
Divergence trading strategy is about identifying the reversal signal. The possibility of price reversal may be as immediate as possible; however, the actual price reversal may happen with a delay. Furthermore, the price may retrace a few times before the exact trend reversal occurs. So, divergence traders should approach the trading strategy with caution if the price reversal happens near support, resistance, or channel lines.
Conclusion
The Knoxville divergence indicator for MT4 is an essential technical tool for forex traders using divergence trading strategies. However, forex traders should confirm the trading signals with other technical indicators as the indicator provide reversal signals.