FX5_Divergence — OSMA Divergence Indicator for MT4 (Bullish & Bearish Setup Detection)

The FX5_Divergence indicator detects classical and reverse bullish/bearish divergences between price and OsMA (Moving Average of Oscillator). It highlights potential turning points by comparing price highs/lows to OsMA peaks/troughs, plotting clean arrows and (optionally) drawing matching trend lines on the chart and in the indicator window. With configurable EMA settings and optional alerts, it’s a practical tool for traders who want objective divergence confirmation without clutter.

What this indicator does

It calculates OsMA from your chosen fast/slow EMA and signal periods, splits the histogram into positive (up) and negative (down) bars for fast visual reading, and continuously checks recent swings for divergence. When a valid pattern appears, it drops a green up arrow for bullish signals or a red down arrow for bearish signals. If enabled, it also draws two synchronized lines: one on price connecting the two relevant highs/lows, and one on the OsMA window connecting the corresponding peaks/troughs.

How it works (inside the code)

• OsMA calculation: Uses iOsMA with fastEMA, slowEMA, and signal (defaults 12/26/9). Positive values are placed into the up buffer; negatives into the down buffer.
• Peak/Trough detection:
  • Peaks require OsMA above zero and a local maximum compared with neighbors, then a forward check to avoid premature signals.
  • Troughs require OsMA below zero and a local minimum with a similar forward check.
• Divergence rules:
  • Bullish classical: OsMA makes a higher low while price makes a lower low.
  • Bullish reverse: OsMA lower low while price makes a higher low.
  • Bearish classical: OsMA lower high while price makes a higher high.
  • Bearish reverse: OsMA higher high while price makes a lower high.
• Signals and lines: When a rule matches, the indicator plots an arrow and, if drawDivergenceLines = true, it draws a line between the two price swings and another between the two OsMA swings (solid for classical, dotted for reverse).
• Alerts: If displayAlert = true, it triggers an alert only when the setup is near the most recent bars (to reduce noise).

Inputs

• fastEMA (default 12)
• slowEMA (default 26)
• signal (default 9)
• drawDivergenceLines (true/false)
• displayAlert (true/false)

Visual elements

• Positive OsMA histogram bars: Lime/Green
• Negative OsMA histogram bars: Firebrick/Red
• Bullish divergence arrow: Wingdings 233
• Bearish divergence arrow: Wingdings 234
• Optional divergence lines on price and indicator windows

Installation (MT4)

• Open MetaTrader 4 → File → Open Data Folder.
• Go to MQL4 → Indicators.
• Paste Divergence inficator .mq4 or the compiled .ex4 into the Indicators folder.
• Restart MT4 or right-click Navigator → Refresh.
• Drag “FX5_Divergence_V2.1” from Navigator → Indicators → Custom onto your chart.
• Adjust inputs, click OK.

How to use it

• Wait for a divergence indicator arrow. Classical patterns (solid lines) tend to be more reliable than reverse (dotted) patterns.
• Use higher-timeframe trend or structure as a filter. Favor bullish divergences in established uptrends and bearish divergences in downtrends.
• Confirm with confluence: price action at key levels, session timing, or a volatility measure (ATR).
• Consider entries on bar close to avoid intra-bar flicker.
• Manage risk with stops beyond the divergence swing and take-profits at nearby structure or R multiples.

Example playbook

• Bullish classical divergence indicator: Price prints a lower low but OsMA forms a higher low, green arrow prints. Enter long after candle close; stop below the divergence low; scale out at prior swing highs.
• Bearish classical divergence indicator: Price prints a higher high but OsMA forms a lower high, red arrow prints. Enter short after candle close; stop above the divergence high; cover near structure.
• Reverse divergences can signal early slowdowns; require extra confirmation.

Best practices

• Test and tune fast/slow/signal periods for your instrument and timeframe.
• On lower timeframes, consider stricter filters (e.g., only classical divergences, or require an engulfing/structure break).
• Avoid trading directly into major news; divergences indicator can get overwhelmed by liquidity bursts.
• Keep charts tidy: enable line drawing only when you need visual study.

Pros

• Objective, code-driven divergence detection.
• Optional synchronized lines for quick study and screenshots.
• Alerts only when signals form near the most recent bars.
• Lightweight and responsive across symbols/timeframes.

Limitations

• Like all divergence indicator tools, signals can fail in strong trends or during news.
• Peak/trough logic aims to reduce noise but is not foolproof on very low timeframes.
• Reverse divergences are more “early warning” than stand-alone entries.