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-   -   Smart Volume Divergence! (https://www.forexfactory.com/showthread.php?t=909822)

bamboopips Apr 16, 2019 7:31am | Post# 1

Smart Volume Divergence!
 
5 Attachment(s)
Hello people!

I bring something really great to share!

Just a little bit of my story. I have been in the market for about 8 years, most of my operations are based on trend lines, Fibonacci and candle patterns in the 5min and 15min T.F. During that time as is the case with most I believe, I have always tried to develop systems to optimize my trading. So after much analysis on the fundamentals behind the price movement I came up with a really logical, mechanical and lucrative system, but unfortunately very restrictive too, because to increase the % of success I ended up sacrificing the number of opportunities I get in every Par, at least in Forex markets, since in the stock markets the system works better. You will see why!

Well, with that in mind I`ll share the system here to see if some good soul could make a EA to help us to spot this oportunity. Because with a good EA we can look to several Pars and several timeframe and sure we get a good number of oportunity in a week. And if looking for signals with renko charts, better. The system is pretty simple and use conventional indicators so I guess its easy to code, but I cant code myself. The idea behind the system is this:

We all hear that the trend is our friend and the best way to have the market going in our favor. We also know that it is often difficult to determine if the price will only retrace or will have a total reversal. So, to help us determine whether we are facing a retrace or a reversal, we will use a volume indicator to look for divergences with the price and thus determine the strength of this opposite movement. The indicator is OBV.

I know, I know. The volume in forex is not real, but still this system Works with a tick volume chart. I use this system for the index and future dollar market here on the Brazilian stock exchange and it works perfectly since the volume data is real. And the system work even better with Renko charts, but we have to be really speddy to catch some movements. Then the EA would be a great help to catch them.

So if someone could code an EA for the MT5 would be great, since this way we could use this system in an environment where we have the actual data of the volume and so the system would have an even greater assertiveness. But as I say before, the system work in Forex witj tick volume too and we could get the forex Pars in MT5 too.

To determine the divergence we will assemble our template as follows:

In the main screen we will add Heiken Ashi, 3 EMA, 21 EMA and 50 EMA.
In the OBV indicator we will place these same averages, but based on the indicator itself and not the closing price of the candle. Here is the hearth of the system. We put the EMAs using the indicator data. For these just drag the Moving average indicator and in the “Apply to” section, use “First Indicator Data”.
I like to leave the line of the OBV invisible to facilitate the identification of the divergences. Since what we will be using is the 3 EMA in relation with the other two slow EMAs.
READY!

SETUP:
The Entry is on the break of the High(Buy)/Low(Sell) of the HeikenAshi candle that trigger the signal.

The condition to get a valid trigger candle is that when the candle closes in the main window, the 21 EMA is Above the 50 EMA for BUY or Below the 50 EMA for SELL in both windows, the main window and the indicator window.

With these conditions in place we wait for a retrace in the main window where the 3 EMA came and cross the 21 or the 21 + 50 EMA. And we then see if the same happen in the OBV window. If not, than we can enter the trade.

So we will have 2 signals. One when the 3 EMA cross just the 21 EMA in the main window and not in the OBV, and the other when the 3 EMA cross both 21 and 50 EMA and we don’t get the same in OBV.

The stop is a few pips behind the last top or bottom of the last 5 candles. And the target at least 1:1 or more.

With this setup we can expect great signals.

I'm going to post some examples of the signal in Forex and Stocks, with Candle and Renko Charts for you to get a clear idea and see the power of this setup.
And I really hope that someone could make a EA in MT5 to trade then. Since there we could spot some excelent trades in stocks and future markets using renko charts.

Note: When using renko I still use the HeikenAshi to get the trigger candle.
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MTX - Volume Divergence.tpl

dicojoxaftr Apr 16, 2019 7:58am | Post# 2

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be smart, quit the game noobs

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osittu Apr 16, 2019 9:47am | Post# 3

What is the use of the Heiken Ashi in the whole set up?
Also, what time frame is best for this?


Thanks

bamboopips Apr 16, 2019 9:57am | Post# 4

What is the use of the Heiken Ashi in the whole set up? Also, what time frame is best for this? Thanks
The heiken ashi is a way to make the trigger more mechanic, so the EA could be made more simple to code.
But when I trade If I see a Pinbar or a Engulfing with the other conditions in place I enter the trade before the Heiken Ashi triguer.
I use renko and 1min in Brazilian Index Future, and in Forex 5min and 15min!
The setup is good for all time frames, but you will get few signals in a year in 4 hour and daily. But with a EA we could monitor several par in several T.F.
Because the logic remain the same in any T.F.

hibra68 Apr 16, 2019 10:34am | Post# 5

looks like all your trades were against the trend

bamboopips Apr 16, 2019 11:40am | Post# 6

looks like all your trades were against the trend
No! Because the trade is always taken acording to the direction of 21 and 50 EMA. The Main trend maybe, but with 21 and 50 EMA in line, the vast majority of time the price keep going another wave.

bamboopips Apr 16, 2019 12:40pm | Post# 7

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Another Examples using renko and 1min charts in B3 (Brazilian Stock Exchange)!
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crodzilla Apr 16, 2019 1:11pm | Post# 8

Volume Divergence.
Love it! Provides excellent opportunities.
Sorry, I wish I had time to write an EA for it.

Carl

Old_Dog Apr 16, 2019 1:29pm | Post# 9

I have just dropped your setup on a few charts and I am almost spoiled for choice with the opportunities

Very nice indeed - great idea!

Best wishes and kind regards,

OD

.

bamboopips Apr 16, 2019 2:02pm | Post# 10

I have just dropped your setup on a few charts and I am almost spoiled for choice with the opportunities Very nice indeed - great idea! Best wishes and kind regards, OD .
Thanks for the reply!
Yes! Its a great setup.
And with renko charts and real volume the signals are stronger!

crodzilla Apr 16, 2019 2:27pm | Post# 11

Well, I do love the look of the renko charts.
I may have to move this project up in my queue...
Many thanks.

Carl

bamboopips Apr 16, 2019 2:40pm | Post# 12

Well, I do love the look of the renko charts. I may have to move this project up in my queue... Many thanks. Carl
you are welcome!

jereajali Apr 16, 2019 4:54pm | Post# 13

{quote} you are welcome!
Great one here. Easy to follow too. Can you help attach the template so we all have same. Thanks

hibra68 Apr 16, 2019 4:56pm | Post# 14

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Is this correct?
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Namor Apr 16, 2019 5:34pm | Post# 15

Is this correct? {image}
Hi hibra68,
which OBV indicator do you use?

bamboopips Apr 16, 2019 5:35pm | Post# 16

Is this correct? {image}
I see you are using a Smothed HeikenAshi. I use the standart Heiken Ashi.
But if the green line in the OBV doesnt cross the 21 ema, you can search for a BUY!

bamboopips Apr 16, 2019 5:52pm | Post# 17

{quote} Great one here. Easy to follow too. Can you help attach the template so we all have same. Thanks
Just attach to first post! Thanks!

bamboopips Apr 16, 2019 5:53pm | Post# 18

{quote} Hi hibra68, which OBV indicator do you use?
The one that came with Meta trader. Just change the color to "none" and put the EMAs using the OBV data.

hibra68 Apr 16, 2019 6:26pm | Post# 19

{quote} I see you are using a Smothed HeikenAshi. I use the standart Heiken Ashi. But if the green line in the OBV doesnt cross the 21 ema, you can search for a BUY!
I was thinking of selling , I guess I misunderstood the system. So its a trend continuation?

bamboopips Apr 16, 2019 7:13pm | Post# 20

{quote} I was thinking of selling , I guess I misunderstood the system. So its a trend continuation?
Yes! Its a trend continuation! We use the divergence with OBV to see if the retrace is only a retrace or its a turn in the market direction. Usually if the moviment of OBV doesnt folow the movement in the chart, we get a high probability that the trend will continue.


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