The Disparity Index Signals Metatrader 5 forex indicator is used to define the high/low price levels.
The indicator pops up within a separate window with histograms that are colored differently and are bordered by dim gray upper and lower levels.
The color of the histograms are blue and dodger blue, which designates when they’re formed above the zero level, while red and tomato histograms are used to specify when the histograms are formed below the zero level.
Another take away from the Disparity Index indicator is its ability to signal overbought and oversold market conditions, when the histograms are filled blue and red respectively.
At this point, traders should be on the lookout for price patterns that suggest a possible reversal.
The EUR/GBP H1 chart below displays the Disparity Index Signals Metatrader 5 forex indicator in action.
Basic Trading Signals
Buy Signal: Go long when the histograms of the Disparity Index Metatrader 5 forex indicator turns blue and dodger blue, while staying above the zero signal level.
Sell Signal: Go short when the histograms of the Disparity Index Metatrader 5 forex indicator turns red and tomato, while staying below the zero signal level.
Exit buy trade: Close all buy orders if while a bullish trend is running, the Disparity Index indicator forms a tomato histogram that is aligned below the zero signal level.
Exit sell trade: Close all sell orders if while a bearish trend is ongoing, the Disparity Index indicator displays a dodger blue histogram that is aligned above the zero center line.
Tips: It is advisable to combine the overbought/oversold model of the Disparity Index indicator with appropriate candlestick representations.
Although bulls and bears markets are represented using rising and decreasing index respectively, divergence is another potent means of defining trends.
Implement this indicator in your scalping, day trading and swing trading strategies.
MT5 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 5
Type: chart window indicator
Customization options: Variable (Index method, Index period, levels coefficients), width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend | overbought/oversold
Copy and paste the disparityindex.ex5 indicator into the MQL5 indicators folder of the Metatrader 5 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL5 > Indicators (paste here)