Hi, Is it possible to know divergance through pure price action without using any indicators? Thanks.
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Hi,
"to know divergence" rather inherently requires there is some idea of a baseline or 'normal' position to deviate from. A working definition of price action might be the study of price movement through time. So, what is price deviating from? Price is price so it can't deviate from itself. You need to define some price related baseline to measure deviation from.
Without reference to indicators and just looking at price and time (as per the definition), you could look at things like how far price has moved in a given time compared to how far it has moved on average in the past in the same period of time. So, for example, is an unusually big candle a divergence to be reversed from or a signal of momentum continuation?
There is no absolutely 'right' answer to this question, it depends on your views and beliefs. Believers in mean reversion will be looking for an overextended reversal, momentum followers will be looking to jump on board for more. And in either case, how do you decide how much divergence is significant?
Point is, you can measure divergence pretty much any way you want, with or without indicators. I honestly doubt there is a universal truth of divergence out there waiting to be discovered that will lead to trading riches. Perhaps the more important consideration is how you trade any given divergence, however defined, rather than worrying unduly about what exactly the divergence is and how it is measured. Pick a definition that suits you and focus on finding a way of trading it profitably.
Price is price..if price goes down,price goes down ..if price continues upwards,price continues upwards..check the Fibonacci man by Leonardo,the left foot is extended outwards, explaining the over extension of price to form divergence..so basically divergence is a myth by traders desperate for reversals than trying to make cash
