ok, u're not the first one who asked that question. this HAS been a good question and still is.
80% of the time, a bearish/bullish (classic) divergence is always followed by a bullish (hidden) divergence. that's a fact.
i have came with a solution to where and when a divergence breaks. this might be a bit of a lot of read and maybe a bit hard to understand, but bear with me.
one of the main reasons i use CCI30 is just for that. on the same chart u have, u placed the CCI TL incorrectly, go back and place that TL on the peaks of CCI (highs). the bearish divergence was soon followed by a bullish hidden divergence:
bearish divergence playout IF:
1) m30's 50ema is taken out
2) we close at a lower price of that where the other lower bottom on MACD is taken out.
3) CCI30 (and most importantly) closes below the -100 line.
the third part (to me) is the most important. unlike most indicators, CCI resembles the typical price (u can find more info about CCI ont he net). close below/above resistance lines doesn't necessarily mean oversold/overbought levels, but rather it means BREAKOUT. as i'm typing this, CCI30 on the m30 chart has pierced throught the -100 line and is just above 50ema (i took some partial profit at the open of this new m30 candle). i always confirm with m30, but 1h is even better for confirmation. once 1h cci30 closes below the -100 line, this will tank really nice.
bearish divergence failure (on the same chart u have):
1) if cci30 breaks that descending TL to the upside
2) after breaking to he upside, CCI has to close above the 100 line.
3) we get a higher high on CCI or MACD, but here's the trick, that could also mean a classic bearish divergence backed by hidden bearish IFFF price fails to make a higher high.
confusing right? but trust me, the world of divergence is humungous, and mastering it is not a simple task, but once u do, it's VERY powerful. getting tops and bottoms would be a breeze
i found that CCI is the best confirmation for divergence, and MACD (the one i use) the best for spotting that divergence. it's all up to you to choose the indicator. but as long as u're getting on the right track, which indicator u use shouldn't be an issue.
I recommend you read something else as this sentence is now concluded.
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