Divergence and hidden Divergence

cad chf update

nzdcad h4

usdcad update

eurjpy m30

nzdusd h1 -hd

closed +32 pips

USDCHFH2
-RD

NZDJPY H6

:nerd:

GBPAUD H4

GBPJPY

usdchf h2 again
alt bat

GBPAUD H4

usdcad

Divergence is often said to be a leading indicator. Divergence is price action measured in relationship to various indicators ie., MACD, CCI, RSI, Stochastic and others or in relationship to another instrument or measure of the market like Tick.

I trade both standard and hidden divergence patterns when I look for my system trade entry points. The chart for the EURUSD shows a multi-cycle and an inner cycle standard divergence leading up to both "buy at bar close" entry points.

Here at FF many traders seem to dislike divergence and prefer EWP or PP to spot their setups. IMO instead divergence is quite easy and profitable.

I find some traders don't understand what divergences mean or how to rank the strength of a divergence. Divergences should never be the sole reason to enter a trade but they do an outstanding job of pointing out transitions in price momentum. The indicator used and how well it does, to show the changes in price momentum, are also crucial factors for utilizing divergence. I don't take trades working against price momentum, I wait for entry after the momentum aligns with my trade direction. There is good energy in price movements that shift out of divergences and I consider diveregnces an important part of my method.

Below is a good example of how to use price momentum indicators to qualify trade entry points during an indicated divergence. The example shows that you don't use the divergence as your entry signal alone, but you can use that divergence to identify a higher probability entry point.