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Hidden divergence

  • #2,041
  • Jun 7, 2019 8:17am Jun 7, 2019 8:17am
EURJPY: A young HD pattern forming on the Daily. Still a long way to go, but worth monitoring.
Attached Image (click to enlarge)
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  • #2,042
  • Jun 7, 2019 8:20am Jun 7, 2019 8:20am
Chamane,

I appreciate how clean and simple your charts are.
I find myself often missing out on great setups due to work responsibilities. I've started to focus my attention to longer TF's, (Monthly & Weekly)

I have yet to come across an alert for mt4 that effective on identifying candle divergence (on chart), along with Stoch & Macd combined. Individual pieces, yes)

Would appreciate any tips and or advice you have for the typical 9-5'er who has to work around their 'life-style' would be greatly accepted.

Side note, i've lurked and read through your excellent non BS thread, the people in here are great, and you continue the support.
Thank you for sharing your approach, along with your constant content.

Bless you for that and wishing you continued green pips.

ifti
  • #2,043
  • Edited 9:06am Jun 7, 2019 8:50am | Edited 9:06am
Quoting Mojotrades
Chamane, I appreciate how clean and simple your charts are. I find myself often missing out on great setups due to work responsibilities. I've started to focus my attention to longer TF's, (Monthly & Weekly) I have yet to come across an alert for mt4 that effective on identifying candle divergence (on chart), along with Stoch & Macd combined. Individual pieces, yes) Would appreciate any tips and or advice you have for the typical 9-5'er who has to work around their 'life-style' would be greatly accepted. Side note, i've lurked and read through your...
Hi Mojotrades,

Thanks for the kind words. I'm not different from other traders here on FF. Just trying to find my Holy Grail. I am contributing as much as I can and I am expecting others to do so. I have gathered quite a few tips the past few years that way. Mind you, you also have to give credit to Dany who started this thread.

I miss out many HD opportunities myself since I am not trading full time. That's why I also prefer higher timeframes, not to mention that drilling down as I do sometimes brings me to small timeframes that do not go well with high spreads. I usually watch for HD patterns on 4HR charts and up, just like this one:
Attached Image (click to enlarge)
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It is not easy to get an alarm for divergences. I looked at different indicators but the signals they give are far from perfect. I prefer to spot HD manually. I think that the best tip I can give is to check for MACD cross of the zero line. It is a clear signal and the one I use most of the time for entries (along with trendlines). So if you get a signal on the 4HR chart for instance, you just have to check on the Daily chart if there is a HD pattern. Also, you could still switch to the 30 min chart for entries since the signal is the start of a trading zone on a cost averaging approach.

Wish you many green pips.
  • #2,044
  • Jun 7, 2019 9:02am Jun 7, 2019 9:02am
Oh man, you just gave a great tip.
I didn't think of that approach, just having maybe a macd dashboard with alerts on our preferred tf, and if signaled, we can approach that higher respective TF.
Thank you for dropping that nugget Chamane.

Dany, apologies for not giving credit where it's due.
  • #2,045
  • Jun 10, 2019 2:25am Jun 10, 2019 2:25am
EURUSD
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  • #2,046
  • Jun 10, 2019 3:53am Jun 10, 2019 3:53am
the same graph using ichimoku
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  • #2,047
  • Jun 10, 2019 8:33am Jun 10, 2019 8:33am
Quoting chamane
{quote} Hi Mojotrades, Thanks for the kind words. I'm not different from other traders here on FF. Just trying to find my Holy Grail. I am contributing as much as I can and I am expecting others to do so. I have gathered quite a few tips the past few years that way. Mind you, you also have to give credit to Dany who started this thread. I miss out many HD opportunities myself since I am not trading full time. That's why I also prefer higher timeframes, not to mention that drilling down as I do sometimes brings me to small timeframes that do not...
Sir I only have one issue now.. this MACD crossing zero line... How do you fix it to it? Do you manually draw out zero line or how do you get it? I spot many HD and normal D mosttimes but I don't know weather to take trade or not cause there's no zero line on mine.. and if you manually draw it what do you consider before drawing it? Do you calculate lines or you just draw a zero anywhere ... Please explain to me please . thanks
"The market doesn't care about you, stop hoping it will." Dirk
  • #2,048
  • Jun 10, 2019 12:35pm Jun 10, 2019 12:35pm
Quoting Flashyberry
{quote} Sir I only have one issue now.. this MACD crossing zero line... How do you fix it to it? Do you manually draw out zero line or how do you get it? I spot many HD and normal D mosttimes but I don't know weather to take trade or not cause there's no zero line on mine.. and if you manually draw it what do you consider before drawing it? Do you calculate lines or you just draw a zero anywhere ... Please explain to me please . thanks
Flashyberry,

I'm not sure that I understand your question. Just look at your MACD indicator, you should see the zero level at the right end of it (arrow). The cross of MACD zero line is when the indicator line crosses the zero level.
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  • #2,049
  • Jun 10, 2019 4:29pm Jun 10, 2019 4:29pm
Quoting chamane
{quote} Flashyberry, I'm not sure that I understand your question. Just look at your MACD indicator, you should see the zero level at the right end of it (arrow). The cross of MACD zero line is when the indicator line crosses the zero level. {image}
Oh my God I have been doing it all wrong !!!!!! I was thinking it's a different 0 ... Like the O you see on the screen.. I didn't know that's thesame one you were talking about. Thank you so much now. I have to analyze past trades and memorize patterns
"The market doesn't care about you, stop hoping it will." Dirk
  • #2,050
  • Jun 14, 2019 6:36am Jun 14, 2019 6:36am
A clear hidden divergence pattern on the Daily chart and one entry so far in the trading zone on the 30 min TF.
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPY.png Size: 51 KB
  • #2,051
  • Jun 14, 2019 8:11am Jun 14, 2019 8:11am
Quoting chamane
A clear hidden divergence pattern on the Daily chart and one entry so far in the trading zone on the 30 min TF. {image}
Seek your thoughts on trade management:
How do you set the target when trading using drilldown technique & MACD. One of the common issues I saw in my recent trades is incorrect target setup. When taking an entry in M15 based on an HD in H2, I keep the target based on H2 chart & stop is based on M15 swing high.

The common outcomes I got are; a) earned profits are given back due to either break-even or stop hit trades, b) profits are booked too early based on M15 chart whereas trend continues hitting target of H2 chart.

From pyschological perspective, how can we achieve set & forget kind of trading style without manipulating the trade too much.
  • #2,052
  • Edited 3:08pm Jun 14, 2019 1:23pm | Edited 3:08pm
Quoting rmchokku
{quote} Seek your thoughts on trade management: How do you set the target when trading using drilldown technique & MACD. One of the common issues I saw in my recent trades is incorrect target setup. When taking an entry in M15 based on an HD in H2, I keep the target based on H2 chart & stop is based on M15 swing high. The common outcomes I got are; a) earned profits are given back due to either break-even or stop hit trades, b) profits are booked too early based on M15 chart whereas trend continues hitting target of H2 chart. From pyschological...
Hi rmchokku,

Deciding when to get out is one of the hard parts of trading. Here is what I think:

  1. when I trade from the HD pattern (main) chart, I enter when price crosses a trendline or when the indicators (Stochastic and MACD) give signals. I place my stop loss level to the last swing high/low and place my profit level at a RR = 1:1. When price reaches half the risk, I bring the stop loss level to breakeven plus a few pips. If I realize that I could have made a lot more profit as I got stopped out too early, it doesn't matter. I would reach my objective of protecting my capital asap and avoid a loss. There will be lots of other opportunities and since hidden divergence is a trend continuation pattern, it will give a decent success rate. I don't trade often from the main TF because the risk is often too high with 4HR charts and up even with the lowest available unit ( 0.01 lot in my case).
  2. trading a lower timeframe after spotting hidden divergence gives the opportunity to get a lower risk and therefore to enter two units (0.02 lot in my case) instead of one as long as I do not exceed 2-5% of my capital. Here again, I bring my stop loss to BE when price reaches half my risk and if I get stopped out, I don't bother and look for other trades. But if price reaches my risk in profit, I close one unit and let the other run with a stop loss to breakeven plus a few pips. That way I can catch a big run if it ever happens and it answers your concern of booking profits too early. Aiming a RR = 1:1 for one unit and a RR = 1:2 for the other is also a good choice IMO.
  3. switching to a lower TF again in a cost averaging approach is something I've been doing more lately. It is another convergence tool that minimize the probability of losing. Gerald E. Greene in his book does not give a money management technique, but so far I've been trading each entry the same way I mentioned in my first point and I adjust my units to risk 2-5%. Since you can anticipate more than one entry in what I call the trading zone, I am know considering adding to my position instead of closing after reaching RR = 1:1. If the trading zone extends for a long time, there is a chance that it will generate a lot more pips.

It may seem academic and theoretical, but that's what I am trying to do the best I can. I don't trade for a living right now, but even with my small capital and consistent winning record, it can bring me very far.

  • #2,053
  • Jun 14, 2019 1:44pm Jun 14, 2019 1:44pm
Quoting chamane
A clear hidden divergence pattern on the Daily chart and one entry so far in the trading zone on the 30 min TF. {image}
Hello Chamane,

Apologies if i have missed this on the forum, but how are you determining the 'trading zones' (blue blocks) on the 'trigger' time-frame, in this case the H4?

Thank you.
Also, have you uploaded a template previously with the arrow when it crosses over what looks to me like a qqe but on the candlestick chart..?

Thank you Chamane!
  • #2,054
  • Jun 14, 2019 3:26pm Jun 14, 2019 3:26pm
Quoting Mojotrades
{quote} Hello Chamane, Apologies if i have missed this on the forum, but how are you determining the 'trading zones' (blue blocks) on the 'trigger' time-frame, in this case the H4? Thank you. Also, have you uploaded a template previously with the arrow when it crosses over what looks to me like a qqe but on the candlestick chart..? Thank you Chamane!
Hi Mojotrades,

What I call the "trading zone" is when MACD crosses the zero line in the middle timeframe of a cost averaging approach. The zone ends when the indicator crosses back the zero line.

The arrow is generated when MACD crosses the zero line.

I am sending you my template and the indicators you have to place in your indicator folder.
Attached File(s)
File Type: mq4 DonchianChannels.mq4   3 KB | 482 downloads
File Type: mq4 FXBay_-_MACD.mq4   3 KB | 536 downloads
File Type: mq4 MACD Cross zero_.mq4   6 KB | 483 downloads
File Type: tpl Divergence.tpl   3 KB | 498 downloads
  • #2,055
  • Jun 14, 2019 5:09pm Jun 14, 2019 5:09pm
Interesting to see your management techniques.

I wanna share mine too

Bigger timeframe: Spot the HD pattern on the Bigger timeframe.
Medium timeframe: Wait for the trading zone to start
Smaller timeframe: Entry/Entries

When an entry occurs, I enter 2 positions of 0,5% risk each, both with the SL at the last swing high/low.

Position 1: Target R:R=1. Move SL to Break-Even when half of the target is reached.
Position 2: No fixed target. Move SL to Break-Even when Position 1 is also moved to Break-Even. Take profit when the 26 period middle donchian channel crosses the 130 period middle donchian channel to the opposite side of the trend/trade.

This way you secure your positions very quickly, you secure some pips when 1:1R is reached, AND you let your profits run in the direction of the trend.

I re-enter only on the same pair/instrument, when my SL is moved to Break-Even on both positions.

Here a trade running at +5R today, with multiple re-entry possibilities i didnt take due to absence of my PC. Same thing on Bitcoin today
I do have to state that the donchian cross didn't happen yet, so everything is possible, it could still be a Break-even trade in the end.

Greetz TheJube.
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  • #2,056
  • Jun 14, 2019 5:32pm Jun 14, 2019 5:32pm
Quoting TheJube
Interesting to see your management techniques. I wanna share mine too Bigger timeframe: Spot the HD pattern on the Bigger timeframe. Medium timeframe: Wait for the trading zone to start Smaller timeframe: Entry/Entries When an entry occurs, I enter 2 positions of 0,5% risk each, both with the SL at the last swing high/low. Position 1: Target R:R=1. Move SL to Break-Even when half of the target is reached. Position 2: No fixed target. Move SL to Break-Even when Position 1 is also moved to Break-Even. Take profit when the 26 period middle...
Sounds great. Similar to what I do.
  • #2,057
  • Jun 15, 2019 4:51am Jun 15, 2019 4:51am
Many thanks Chamane and The Jube for your support & feedback
  • #2,058
  • Edited Jun 16, 2019 4:09pm Jun 15, 2019 7:08pm | Edited Jun 16, 2019 4:09pm
Wekend is usually the time for me to analyze what I did and what I should have done during the past week. I have accumulated more than 50 pips with EURJPY, but EURNZD had a move of over 200 pips. A hidden divergence pattern on the Daily chart and an entry on 4HR TF at the beginning of the week. Using a cost averaging approach in the trading zone had 3 winning entries (so far).
Attached Image (click to enlarge)
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  • #2,059
  • Jun 16, 2019 3:06pm Jun 16, 2019 3:06pm
This pair is worth watching at the start of this week. Price might be going down on a hidden divergence pattern on the Daily chart.
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  • #2,060
  • Jun 16, 2019 3:13pm Jun 16, 2019 3:13pm
There is also a HD pattern developping on the Daily TF for USDCHF. It hasn't matured yet, we'll see what price does later this week.
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