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Hidden divergence

  • #3,421
  • Mar 18, 2020 9:55am Mar 18, 2020 9:55am
Quoting TommyFuture
Hello, I use divergence strategy as well, but in my experienced it is a powerful weapon when you combine it with trend analysis. My set up is 2 simple moving averages of 20 and 200 period, and an RSI of 8 period. When the trend is short (so 20 MA < 200 MA) i search only for negative divergences to go short. When the trend is long (so 20 MA > 200 MA) i search only for positive divergences to go long. This might seems too simple, but I can honestly tell that is working incredibly well since years...
This is a good advice. I also check higher TF with the cross of Donchian 26 and 130 middle bands, BB_Band_Stop (100, std dev 1) or, more lately, the alignement of 100, 300, 600 and 1000 EMA's. It is always good to know the big picture, but we must also think that the HD pattern can also precede a trend reversal.
  • #3,422
  • Mar 18, 2020 9:56am Mar 18, 2020 9:56am
the rest bleeding from usd and jpy.
gbp and aud the worst hit.
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,423
  • Mar 18, 2020 10:04am Mar 18, 2020 10:04am
gj hd
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,424
  • Mar 18, 2020 10:12am Mar 18, 2020 10:12am
a lot of traders still do not believe in hidden and regular divergence.
me too ........ in the beginning .........
a mindset change and willingness to try are required ......... if not, nothing changes ........ trading will be status quo.
that's their prerogative that they are missing out a lot.

i will be taking a break from FF for couple of days ...........
ITB - Seeing Orderliness amongst 'Randomness'
  • #3,425
  • Mar 18, 2020 10:26am Mar 18, 2020 10:26am
Quoting drsa1970
{quote} That would be great If you possibly could Share some screenshots Thank You!
Yes, sure.

Here you can see the chart of GOLD. The trend is short as the MA 20 is < than MA 200.

The price is moving anyway uptrend for some time, creating a swing that is above the previous one, while the RSI si losing strenght (diverging) in overbought condition (over 70).

Then, in my personal strategy as soon as the RSI closing below the 70 level, I will enter a short trade when the low of that candle is broken downwards.


Usually divergences are used to trade reversal strategies. In my opinion, even if you are an experienced trader, it is much more profitable if you have patient and trade only with the 20/200 MA trand, and never against it.
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  • #3,426
  • Mar 18, 2020 10:34am Mar 18, 2020 10:34am
Quoting Inthebox
{quote} upside risk limited by resistance. it was tested 3 times in lower time frame. {image}
an hd
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,427
  • Mar 18, 2020 11:21am Mar 18, 2020 11:21am
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,428
  • Mar 18, 2020 1:51pm Mar 18, 2020 1:51pm
AUDNZD. Following up.
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  • #3,429
  • Mar 19, 2020 5:06am Mar 19, 2020 5:06am
Sweet Crude Oil. HD pattern on the 4 HR chart.
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  • #3,430
  • Mar 20, 2020 12:01am Mar 20, 2020 12:01am
en hd
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,431
  • Mar 20, 2020 11:36am Mar 20, 2020 11:36am
gc hd
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,432
  • Mar 20, 2020 5:27pm Mar 20, 2020 5:27pm
gosh. i woke up to never seen before new cases. jumps by the thousands.
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,433
  • Mar 21, 2020 1:34am Mar 21, 2020 1:34am
Quoting TommyFuture
{quote} Yes, sure. Here you can see the chart of GOLD. The trend is short as the MA 20 is < than MA 200. The price is moving anyway uptrend for some time, creating a swing that is above the previous one, while the RSI si losing strenght (diverging) in overbought condition (over 70). Then, in my personal strategy as soon as the RSI closing below the 70 level, I will enter a short trade when the low of that candle is broken downwards. Usually divergences are used to trade reversal strategies. In my opinion, even if you are an experienced trader, it...
Thank you TommyFuture,
Clear sample and thanks for sharing,
And it works on all TF with the same indicator setting?
If you don't build your DREAM, Someone will hire to help build theirs ...
  • #3,434
  • Mar 21, 2020 7:46am Mar 21, 2020 7:46am
Here are HD patterns that took place during this past volatile week on the 4 HR timeframe. I like to enter trades when the MACD line crosses the zero line on the next lower TF (1 HR chart). The majority of cases gave a winning situation (RR = 1:1) assuming we place the stop loss level at the last swing high/low and that we bring it to breakeven (+few pips) when price reaches half the risk in profit. Despite that money management method, there were losing trades. Switching to the 5 min chart in a cost averaging approach, most of those trades would have turned into winning situation overall. That's what I therefore recommend whenever possible and with low spread instruments.

Backtesting is easier than entering trades in real time. That's where MACD or other indicator's trigger signal become handy. When getting an entry signal, we should check the higher timeframe too ensure there is a Hidden Divergence pattern developing.
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  • #3,435
  • Mar 21, 2020 7:47am Mar 21, 2020 7:47am
The rest of it.
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  • #3,436
  • Mar 21, 2020 8:44am Mar 21, 2020 8:44am
another round of equities selling coming week.
https://www.businessinsider.sg/us-jo...20-3?r=US&IR=T
https://ihsmarkit.com/research-analy...-to-13-q2.html
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,437
  • Edited 11:36am Mar 21, 2020 11:24am | Edited 11:36am
To illustrate what I meant in my previous post, I reviewed the last MACD zero line cross on the Daily chart on each pair and checked if the cross was made during or just following a Hidden Divergence pattern in the same direction on the Weekly chart. Here are the cases I found.

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The same technique can be used for Regular Divergence as well. Here is an example with Gold.

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Note that on the Weekly charts the Hidden Divergence patterns are all in the direction of the BBandsStop (100,1) indicator, signifying the trend of the higher timeframes.
  • #3,438
  • Mar 22, 2020 10:41pm Mar 22, 2020 10:41pm
en m30 rd
ITB - Seeing Orderliness amongst 'Randomness'
  • #3,439
  • Mar 23, 2020 1:18am Mar 23, 2020 1:18am
ea m30 rd
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ITB - Seeing Orderliness amongst 'Randomness'
  • #3,440
  • Mar 23, 2020 1:34am Mar 23, 2020 1:34am
Quoting Inthebox
en m30 rd
en m30 rd
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ITB - Seeing Orderliness amongst 'Randomness'
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