Hidden divergence

Quoting rmchokku

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One of the interesting aspects on relation between HD & Classical divergence got a mention in Martin Pring book. HD often warns of impending trend pullback/reversal. (Refer Martin Pring in his book "Market Momentum" under section "Advance Breakdowns and Breakouts"). Also, you might have noticed that HD comes before classical divergence in a bull to bear market transition and follows it in bear to bull mkt transition.

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Quoting rmchokku

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Drilldown technique: (identifying the tradezone in higher timeframe and drill down into lower timeframe for entry) a) Is there a ratio timeframe we need to use for identifying trade zone after identifying trend in a HTF? b) can it be embedded into a strategy for trade entry?

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Quoting chamane

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{quote} rmchokku, Here are the TF's I use: {image} It's my personal choice.

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Quoting rmchokku

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I read this in one MACD book. "Enter short if MACD has crossed below zero within the last five bars. Otherwise, wait for the next MACD signal. Similarly for bullish crossover." Do you apply this? For understanding, is it stating that entry to be made only if MACD line crosses zero within first 5 negative momentum/price bars for a sell trade?

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Quoting chamane

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{quote} I don't count bars with MACD, but it can be a gage for indicators like Stochastic or RSI. For instance, I use 8,3,5 settings so when I am waiting for a divergence signal, the distance between peaks should be around 8 candles apart, maybe up to the double. If there is more than that, there is often some noise between the main highs or lows and I don't personally consider the pattern to be valid.

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Quoting rmchokku

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Platinum has got bullish HD in Daily, Trade zone in H2 and trade setup is found in M10. Entry @ 869.5, Tgt - 875.6, SL - 865 could be a trade plan. {image} {image} {image}

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Quoting dany78

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GBPJPY {image}

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Quoting chamane

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AUDJPY 4 HR. {image}

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Quoting rmchokku

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{quote} Missed my entries in JPY pairs and await pullback! The bullish HD in GBPAUD H4 failed. Any thoughts on GBPAUD HD? I took a long trade H4(HD)-H1(Trade zone) and M5(entry) but closed at breakeven. If the trading zone timeframe is much lower than that of HD timeframe (e.g. instead of H4 using H1 to identify trading zone for a HD in Daily chart), will it cause false trade entries?

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Quoting rmchokku

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{quote} Missed my entries in JPY pairs and await pullback! The bullish HD in GBPAUD H4 failed. Any thoughts on GBPAUD HD? I took a long trade H4(HD)-H1(Trade zone) and M5(entry) but closed at breakeven. If the trading zone timeframe is much lower than that of HD timeframe (e.g. instead of H4 using H1 to identify trading zone for a HD in Daily chart), will it cause false trade entries?

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Quoting chamane

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{quote} rmchokku, Just to be clear, you can trade the HD pattern on the main chart only using indicators, trendline cross and price action. If you decide to use lower timeframes for entries like I do, I suggest the next lower timeframes which are usually around 5 times lower. From there If you decide to use a cost averaging approach, Greene suggests 8 to 12 times lower. He uses greater ratios in his book, but I would stick to something close to 10.

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