Ok the question of hidden divergence.
First off, let's not get into why things have particular names, remember the names came from people in the past applying them rightly or wrongly and through the passage of time have become accepted terms. I have argued my case in the court of public opinion many times but it is extremely difficult to prove the world is not flat if so many believe it is so. OK having said that I will stick with my terminology and tell you why it is so.
A regular divergence in the bullish sense is where the price makes the lower low pivot but the indicator (RSI) makes a higher low pivot, in other words they are telling a conflicting story.
The difference between a regular divergence and a hidden divergence is in the pivot timing. Let's say we are looking at a 30 minute chart and 15 mins in we see we have a divergence, traders bail out of their shorts (or hedge) and they and others start buying so in effect the divergence disappears over the latter 15 mins making the signal a now hidden divergence because we can no longer see it, in effect it is hidden from view because the RSI does not have wicks and tails like the price chart so we have no history to refer to. We have to be there to see it at the time, we cannot see something that is hidden.
First off, let's not get into why things have particular names, remember the names came from people in the past applying them rightly or wrongly and through the passage of time have become accepted terms. I have argued my case in the court of public opinion many times but it is extremely difficult to prove the world is not flat if so many believe it is so. OK having said that I will stick with my terminology and tell you why it is so.
A regular divergence in the bullish sense is where the price makes the lower low pivot but the indicator (RSI) makes a higher low pivot, in other words they are telling a conflicting story.
The difference between a regular divergence and a hidden divergence is in the pivot timing. Let's say we are looking at a 30 minute chart and 15 mins in we see we have a divergence, traders bail out of their shorts (or hedge) and they and others start buying so in effect the divergence disappears over the latter 15 mins making the signal a now hidden divergence because we can no longer see it, in effect it is hidden from view because the RSI does not have wicks and tails like the price chart so we have no history to refer to. We have to be there to see it at the time, we cannot see something that is hidden.
Attached Image (click to enlarge)
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