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Divergence

  • #1
  • First Post: Feb 3, 2007 4:36pm Feb 3, 2007 4:36pm
Anybody have much success trading divergence.

Daily Divergence on the USDCAD and the trend lind is weaker.
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  • #2
  • Feb 3, 2007 4:41pm Feb 3, 2007 4:41pm
Hmmm... Rather than investigating Divergence, I might suggest you research Parabolic Curve in Trading.
  • #3
  • Feb 3, 2007 5:34pm Feb 3, 2007 5:34pm
HI
THERE IS SOME THING WRONG WITH YOUR CHART MAYBE YOUR DIVERGENCE IS NOT CORRECT

YOU CAN'T DRAW IT LIKE THAT YOU
have look at divergence rouls
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  • #4
  • Feb 3, 2007 5:53pm Feb 3, 2007 5:53pm
Like this
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  • #5
  • Feb 3, 2007 5:56pm Feb 3, 2007 5:56pm
Or like this
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  • #6
  • Feb 3, 2007 9:13pm Feb 3, 2007 9:13pm
Good it looks better now
first one is most right but second one did not complete yet!!
Daily chart is 2 large or ?? I think you better trade Divergence on 4H chart and use daily chart as comfirmation for the trend up or down
and you can use many indicators like MACD
OsMA , RSI , CCI , Stochastic all od those are good for Divergence and if you put all of them on the chart you never miss trade but don't enter when you see Diverence you must use trends lins and fibonacci levels or support and resistance and so
plan your trade and trade the plan
Divergence is amazing but need to be careful
and to be come pro you needs time
  • #7
  • Feb 3, 2007 9:20pm Feb 3, 2007 9:20pm
The problem I have with divergence is that it is a strong trend countertrend signal that usually has bad timing. The truth behind my bias though is this, Divergence is not complete without a good analysis on time cycles that tie in with divergence to give better accuracy and reduce risk. Trading divergence is a dangerous practice without a good understanding of the relevent time cycle associated with the pair.
Man who scratches ass should not bite fingernails
  • #8
  • Feb 3, 2007 9:27pm Feb 3, 2007 9:27pm
A look on the 4hr chart
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  • #9
  • Feb 3, 2007 9:30pm Feb 3, 2007 9:30pm
hr chart. Seems like it takes time for it to develop?
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  • #10
  • Feb 3, 2007 10:00pm Feb 3, 2007 10:00pm
Its not any more dangerous then anything else dblhc dbhlc pin bars etc you just wait for the break out if it comes it comes if it dont it dont it is not automatic. I realize that.
Quoting Leugimp
The problem I have with divergence is that it is a strong trend countertrend signal that usually has bad timing. The truth behind my bias though is this, Divergence is not complete without a good analysis on time cycles that tie in with divergence to give better accuracy and reduce risk. Trading divergence is a dangerous practice without a good understanding of the relevent time cycle associated with the pair.
  • #11
  • Feb 3, 2007 10:12pm Feb 3, 2007 10:12pm
  •  Trader#0000
  • | Status: Unregistered Trader
I have found that divergence will occur quite frequently the corrections of strongly trending markets (I trade with RSI and MACD Histogram and it would normally appear on both). For this reason I find that (for example) going short (long) on a bearish (bullish) divergence on a 5 min chart will offer only limited gains and I use a TP such as an established trend line or another measure of trend (such as a MA). I find that I have more confidence of a trend reversal with price/indicator divergence when:

a) It appears on the next higher time frame then what I am trading in.
b) It appears on my current time frame and price penetrates an established trend line, moving average, etc.

That said when I see any form of divergence, it will always put me on alert for either a correction (and an opportunity to enter an established trend) or a reversal.
  • #12
  • Feb 3, 2007 11:44pm Feb 3, 2007 11:44pm
Quoting khaldonm
HI
THERE IS SOME THING WRONG WITH YOUR CHART MAYBE YOUR DIVERGENCE IS NOT CORRECT

YOU CAN'T DRAW IT LIKE THAT YOU
have look at divergence rouls
Your second condition for long and short is hidden divergence, and it's powerful. Hidden divergence means in a down trend you look at the highs instead of lows and in an uptrend you look at the lows instead of highs.
Regular divergence in a strong trend is useless. A hidden divergence in a strong trend has a lot of chances to succeed, corelated with other signals.
Take a look at aud jpy on daily chart. Strong uptrend and bullish hidden divergence.
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Try hard, think fast, die young
  • #13
  • Feb 3, 2007 11:49pm Feb 3, 2007 11:49pm
Quoting goodthings
A look on the 4hr chart
This is not a divergence yet, i think it will be but it's not yet. If you take a look at macd you will see that it hasn't return yet. So teoreticaly it still has chances to go higher. I thas to make a bar lower than the previous one, and as i can see the last bar in macd is the highest one, so no peak yet.
Try hard, think fast, die young
  • #14
  • Feb 4, 2007 12:04am Feb 4, 2007 12:04am
I see what you are saying in regards to the macd not returning but what do you mean by hidden divergence?
Quoting dof
This is not a divergence yet, i think it will be but it's not yet. If you take a look at macd you will see that it hasn't return yet. So teoreticaly it still has chances to go higher. I thas to make a bar lower than the previous one, and as i can see the last bar in macd is the highest one, so no peak yet.
  • #15
  • Feb 4, 2007 12:14am Feb 4, 2007 12:14am
Quoting goodthings
I see what you are saying in regards to the macd not returning but what do you mean by hidden divergence?
Regular divergence:
Bearish:
Price make higher highs but macd makes lower highs.
Bullish:
Price makes lower lows but macd makes higher lows.

Hidden divergence:
Bearish:
In a downtrend, price makes lower highs and macd makes higher highs
Bullish:
In an uptrend, price makes higher lows, macd makes lower lows.

So if you look at my example we have 2 bullish hidden divergence. Price makes higher lows in an uptrend and macd makes lower lows.


So a big difference is where you look. In an uptrend for regular divergence you look at highs, but for hidden divergence you look at lows. In a down trend for regular divergence you look at lows, in hidden divergence you look at highs.

Another big difference is that the regular divergence is a trend reversal and the hidden divergence is a trend continuation pattern.
Try hard, think fast, die young
  • #16
  • Feb 4, 2007 8:39am Feb 4, 2007 8:39am
Quoting dof
Your second condition for long and short is hidden divergence, and it's powerful. Hidden divergence means in a down trend you look at the highs instead of lows and in an uptrend you look at the lows instead of highs.

yes you are absolutely right sorry i forgot to mention this

Regular divergence in a strong trend is useless.

is useless till that trend become broken

A hidden divergence in a strong trend has a lot of chances to succeed, corelated with other signals.

yes because it tell you that correction has end


Take a look at aud jpy on daily chart. Strong uptrend and bullish hidden divergence

that is my favorite pattern
.
take care
  • #17
  • Feb 4, 2007 9:24am Feb 4, 2007 9:24am
You can see many regular divergences in a trend. The trend is broken only once. I prefer to miss one trade (if I have nothing else strong enough).
Try hard, think fast, die young
  • #18
  • Feb 4, 2007 10:20am Feb 4, 2007 10:20am
appreciate the ensight
Quoting dof
Regular divergence:
Bearish:
Price make higher highs but macd makes lower highs.
Bullish:
Price makes lower lows but macd makes higher lows.

Hidden divergence:
Bearish:
In a downtrend, price makes lower highs and macd makes higher highs
Bullish:
In an uptrend, price makes higher lows, macd makes lower lows.

So if you look at my example we have 2 bullish hidden divergence. Price makes higher lows in an uptrend and macd makes lower lows.


So a big difference is where you look. In an uptrend for regular divergence you look at highs, but for hidden divergence you look at lows. In a down trend for regular divergence you look at lows, in hidden divergence you look at highs.

Another big difference is that the regular divergence is a trend reversal and the hidden divergence is a trend continuation pattern.
  • #19
  • Feb 4, 2007 10:22am Feb 4, 2007 10:22am
What settings do you set your indicators at. Also I know of the MACD and also recently been told of the MACD histogram which is different. Not in the MT 4. Anybody know anything about this.
  • #20
  • Feb 4, 2007 5:37pm Feb 4, 2007 5:37pm
Monthly Diveregence. Any comments are helpful.
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