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Divergence and hidden Divergence 115 replies

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Best divergence indicator?

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  • First Post: Mar 20, 2007 6:15pm Mar 20, 2007 6:15pm
Hi,

I would like to hear peoples opinions on the best indicator for divergence on the daily charts. I have been looking into the use of Money Flow Index for this, aswell as for overbought/sold levels. Any input would be appreciated!
Quoting Ted1983
Hi,

I would like to hear peoples opinions on the best indicator for divergence on the daily charts. I have been looking into the use of Money Flow Index for this, aswell as for overbought/sold levels. Any input would be appreciated!

Divergence is tricky because it comes in markets that are trending and indicators tend to diverge for long periods of time. As far as indicator selection goes, it is all very personal. I like to use RSI as it has stood the test of time for me, however i will rarely trade in the direction of the divergence unless many other factors line up including time cycles. I rather look to fade these divergence signals at appropriate retracement levels coupled with positive or negative reverse divergence signals thaqt go with the original trend.

One option if you are looking to trade in the direction of the divergence is to look for divergence signals on higher timeframes and then drop down in timeframe for entry in direction of divergence once lower timeframe is showing a trend in that direction. Just know that you are trading against the larger trend and make sure to respect stop levels and keep leverage at an appropriate level.

Just an opinion
Man who scratches ass should not bite fingernails
Best I've experienced.
Attached Files
File Type: ex4 CCI_Divergence_V1.1.ex4   11 KB | 9,978 downloads
File Type: mq4 CCI_Divergence_V1.1.mq4   12 KB | 12,352 downloads
I agree with you.

Quoting reese777
Best I've experienced.
I also use CCI Divergence indicator, but i use it with Stochastic Oscillator to get better buy sell signal.
Quoting Ted1983
Hi,

I would like to hear peoples opinions on the best indicator for divergence on the daily charts. I have been looking into the use of Money Flow Index for this, aswell as for overbought/sold levels. Any input would be appreciated!
I recommend you to read this article:
http://metatrader-indicators.com/201...ce-indicators/
For me its the common as muck MACD!

I love MACD divergence when used at price levels you already expected to hold price, the MACD divergence just helps clarify your thoughts ahead of taking the position.
Quoting Ted1983
Hi,

I would like to hear peoples opinions on the best indicator for divergence on the daily charts. I have been looking into the use of Money Flow Index for this, aswell as for overbought/sold levels. Any input would be appreciated!
MACD
Macd, but they all do the same. just a personal preference, I guess. I find Macd is a bit easier to read. But then again... That's just me.
In my trading platform I always use MACD also I am satisfy about this Divergence.
Quoting Ted1983
Hi, I would like to hear peoples opinions on the best indicator for divergence on the daily charts. I have been looking into the use of Money Flow Index for this, aswell as for overbought/sold levels. Any input would be appreciated!
If you want to find divergent setups that actually mean something, look for divergences between price and speculative COT positioning.
Attached Image (click to enlarge)
Click to Enlarge Name: spxcot.png Size: 37 KB
si hoc legere scis nimium eruditionis habes
Quoting Leugimp
{quote} Divergence is tricky because it comes in markets that are trending and indicators tend to diverge for long periods of time. As far as indicator selection goes, it is all very personal. I like to use RSI as it has stood the test of time for me, however i will rarely trade in the direction of the divergence unless many other factors line up including time cycles. I rather look to fade these divergence signals at appropriate retracement levels coupled with positive or negative reverse divergence signals thaqt go with the original trend. One...
higher tf to lower, works like a charm most of the time!
How effective any indicator is at showing Divergence depends on the settings you are going to use, if you are going to use default settings then you are wasting your time. The default settings were great when the indicator was invented but market dynamics have changed.

Here are 3 stalwarts, Stochastic, MACD and RSI. They are all showing the same thing, the choice you have to make is which one is easier to interpret. Do the same thing with any other indicator you are considering and you will soon see which works for you.
Attached Image (click to enlarge)
Click to Enlarge Name: stochs macd rsi divergence.png Size: 54 KB
Cut your Losers short and let your Winners run.
Quoting numbnuts
{quote} If you want to find divergent setups that actually mean something, look for divergences between price and speculative COT positioning. {image}

hi there, where can I get the COT indi??

thank you in advance
Quoting saticdoor86
{quote} hi there, where can I get the COT indi?? thank you in advance
http://cotbase.com/

or

http://www.timingcharts.com/
si hoc legere scis nimium eruditionis habes
My favorite is the FX5-MACD-Divergence Indi, itīs very reliable on higher time-frames and I get an audio-alert together with a text message.
Simply download it from your MT4 and apply it to the chart, or if you donīt find it there, simply google it. My very best weaon ....
Quoting numbnuts
{quote} http://cotbase.com/ or http://www.timingcharts.com/
the COT indicator looks interesting. What is it based on if not the moving average of price? Where does it derive it's data from?
Quoting justin7
{quote} the COT indicator looks interesting. What is it based on if not the moving average of price? Where does it derive it's data from?
http://en.wikipedia.org/wiki/Commitments_of_Traders
si hoc legere scis nimium eruditionis habes
Quoting numbnuts
{quote} http://en.wikipedia.org/wiki/Commitments_of_Traders
yes i read up it seems that this thing would be lagging though wouldn't it? since the prices it gives out are covering the preceding week and not the current one?
Quoting justin7
{quote} yes i read up it seems that this thing would be lagging though wouldn't it? since the prices it gives out are covering the preceding week and not the current one?
All technical indicators are lagging, as they are derived from price in one way or another. COT isn't a technical indicator though, it is basically the opinion of the markets biggest players - people with more brainpower than you or I, who have put considerable amounts of money where their mouth is. Large speculators on the COT charts are the smartest money in the market - and they are generally big enough collectively to drive price. When a series of higher highs isn't supported by increased large speculative positioning, somethings up. That's the only divergence I pay attention to.
si hoc legere scis nimium eruditionis habes
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