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Hidden divergence

  • #601
  • Jun 10, 2016 7:31am Jun 10, 2016 7:31am
Quoting shrips
{quote} I find the longer the time between peaks and troughs causes a lower success rate but I am basing this only on a 5m TF. I find anymore than 35 bars between highs/lows make the setups less valid and I don't take the trade. I also don't take trades where there is another peak or trough in the middle of the divergence. It must be the next wave. Hidden divergence works well when its in the same move or thrust so therefore the shorter the distance between the divergence the more powerful the move and higher success rate. Take to time to count...
Thanks. I agree with you. I try to avoid noise between peaks and troughs that form the HD. If there are some, I go to the next higher timeframe to see if a HD is still valid. I will surely keep an eye on the number of bars to see if there is any steady pattern coming out.
  • #602
  • Jun 10, 2016 8:00am Jun 10, 2016 8:00am
Here are the main opportunities that occurred this week on the 4 HR timeframe. There were many pips to be caught. Still time to take trades on AUDUSD, USDCHF and NZDUSD if price crosses Tenkan on all charts.

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  • #603
  • Jun 10, 2016 8:07am Jun 10, 2016 8:07am
Quoting chamane
Here are the main opportunities that occurred this week on the 4 HR timeframe. There were many pips to be caught. Still time to take trades on AUDUSD, USDCHF and NZDUSD if price crosses Tenkan on all charts. {image} {image} {image}
hello Chamane

You have to be there, every day !!

i like hidden divergence ; In my opinion, it's one of, if not the most powerful signal in trading.

  • #604
  • Jun 10, 2016 8:15am Jun 10, 2016 8:15am
Quoting dany78
{quote} hello Chamane You have to be there, every day !!
Hi Dany,

I didn't catch them all, only a few of them. I like the 4 HR timeframe because you don't need to be glued to the screen all the time. When I am one candle late, I don't take the trade. Also, I do hesitate many times, but when I look back at what happened during the week, I am telling myself that I should trust the system and stick to the rules.
  • #605
  • Jun 10, 2016 9:38am Jun 10, 2016 9:38am
Quoting shrips
{quote} I find the longer the time between peaks and troughs causes a lower success rate but I am basing this only on a 5m TF. I find anymore than 35 bars between highs/lows make the setups less valid and I don't take the trade. I also don't take trades where there is another peak or trough in the middle of the divergence. It must be the next wave. Hidden divergence works well when its in the same move or thrust so therefore the shorter the distance between the divergence the more powerful the move and higher success rate. Take to time to count...
I've found this to be the case as well on lower time frames but not sure about higher time frames; I will do some testing. thanks for the suggestion
  • #606
  • Jun 10, 2016 11:11am Jun 10, 2016 11:11am
GBP seems to be dropping. Two pairs to watch on the 15 min timeframe.

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  • #607
  • Jun 10, 2016 1:34pm Jun 10, 2016 1:34pm
Stopped out on EURGBP (-25 pips) but nice gain on GBPUSD (+70 pips).

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  • #608
  • Jun 10, 2016 1:44pm Jun 10, 2016 1:44pm
Quoting chamane
Stopped out on EURGBP (-25 pips) but nice gain on GBPUSD (+70 pips). {image}
I'm happy for you, Chamane
you must remember EUR GBP is very difficult
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  • #609
  • Jun 10, 2016 1:55pm Jun 10, 2016 1:55pm
Quoting dany78
{quote} I'm happy for you, Chamane you must remember EUR GBP is very difficult {image}
I prefer higher timeframes, but on Fridays, I often look at the 15 min.
  • #610
  • Jun 10, 2016 4:55pm Jun 10, 2016 4:55pm
Price has just crossed all trendlines. Should be good candidates for long entries at the start of next week. There is a HD pattern on almost every GBP weekly pair.

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  • #611
  • Jun 10, 2016 7:06pm Jun 10, 2016 7:06pm
Hi Y'all

Still waiting for an answer as to why you keep referring to hidden divergence when yours are not hidden.

Don't refer me to Baby Pips they just keep reiterating the same old stuff that puts traders on the wrong track.

The only difference between hidden divergence and so called regular divergence is the hidden divergence is hidden.

What you guys are talking about here has nothing whatsoever to do with hidden divergence.

What you do have is a formula for determining direction based on indicators but in reality the indicators are based on price. Sometimes it works sometimes it doesn't.

It is very easy to draw these lines in hindsight and as you are doing here and scalp a few pips but on the 4 hour chart they may take weeks to form and just as long to execute. However the critical point comes when they have made 50% of their target price at which point they may reverse and completed the target in the opposite direction...This is why they are called Reversals and produce a risk reward value of 1 : 3.

These so called targets are not just random numbers they are accurate to the pip and form support or resistance levels at these points. The market then has to deal with these to form up another signal so all the time we are either in the formation phase or the execution phase, the trick is to know the difference.

So come on, tell me why you call it Hidden Divergence?
  • #612
  • Jun 10, 2016 8:20pm Jun 10, 2016 8:20pm
Quoting Nala66
Hi Y'all Still waiting for an answer as to why you keep referring to hidden divergence when yours are not hidden. Don't refer me to Baby Pips they just keep reiterating the same old stuff that puts traders on the wrong track. The only difference between hidden divergence and so called regular divergence is the hidden divergence is hidden. What you guys are talking about here has nothing whatsoever to do with hidden divergence. What you do have is a formula for determining direction based on indicators but in reality the indicators are based on price....
Not sure I understand your question - the OP didn't invent the term "Hidden Divergence", it's been around for many years and refers to the excellent explanation below from http://www.trading-naked.com/Divergence.htm. Good chart examples there on the topic too.

Nothing works every time. you'll also note from this thread that they aren't relying only on HD appearing as an entry signal, but combine with other confirming signals - PA, TL breaks, Ichi S/R, etc.

"Regular divergence describes a price trend change that will probably happen in the future, albeit shortly. On the other hand, hidden divergence is a confirming indicator of past price direction.
We have hidden divergence when we have higher highs or lower lows in the oscillator but not in price. In this case the direction indicated by higher highs or lower lows in the oscillator is contradicted by the price trend. Unlike regular divergence, where the weakness in price trend is about to lead to a reversal; here the weakness has already led to a little reversal against the trend. The hidden divergence implies that this recent little reversal in price direction will be short-lived and that price will resume moving in the direction of the trend. This is exciting because it can confirm a continuation entry, which is generally much less risky than a reversal entry. What you have here is the opportunity to enter on a pullback of the current trend, which you expect to continue based on this and whatever other indicators you choose. This is trading with the trend, nice and friendly; however, please heed the following warning.
Warning: I consider divergence to be an indicator, not a signal to enter a trade. It would be unwise to enter a trade basely solely on this indicator as too many false signals are given; however, on the other hand, I consider it even more unwise to trade against this indicator."
  • #613
  • Jun 10, 2016 8:28pm Jun 10, 2016 8:28pm
My advice for what it is worth is to stay out of these long term trades because the Brexit decision may have a serious impact on your account. it may even rum through your stops so check your broker agreements regarding stops...

You don't need indicators to know the market is very nervous about the whole of Europe at this time with many traders opting for the more stable Asian currencies if indeed they are not opting to go for gold, silver or whatever at this time.

Get in and out quickly because rumors could easily start a wild fire with the Swissy still fresh in the minds of traders.

With just 12 days to go we are going to witness an historical event where trillions will be lost and made right across the globe. Don't even try to outsmart the market because you simple cannot compete with the speed of super duper algorithms executing in micro seconds.

For goodness sake don't go to bed with a trade still on the table.
  • #614
  • Jun 10, 2016 10:19pm Jun 10, 2016 10:19pm
Thanks JefFX I appreciate you taking the time to answer.

I am not trying to be stroppy with you guys. I have been trading for many years and went to school with Noah. At that time we believed the world was flat and we would fall off if we go too close to the edge. Many books were published on the subject actually carved in stone and pretty soon everyone else thought the same thing and published even more books until all around the world they believed the same thing,

You guys keep sending me to the same old explanations of the same flat world.

I am not saying anyone here invented the term Hidden Divergence.

I just want to know why it is 'Hidden'

If we have a so called Regular Divergence on the 5 minute chart we would not be able to see it on the 1 hour chart, this I can understand the divergence is hidden from me if I am trading the 1 hour chart. Likewise if price makes the higher high and the indicator does not causing the price to snap back this would be hidden on the line chart.

Ever since the markets have started using candles (for reasons beyond me) and the Internet things just keep getting repeated over and over each copying the rhetoric. It doesn't mean the world is flat.

Let me quote from Constance Brown's book on Technical Analysis for the Trading Professional page 124...

"When an RSI Reversal signal occurs within the larger trend for the oscillator. it is called a Hidden Signal, and they are much stronger market signals than Reversals that form at blatantly obvious pivot extremes'.

Note there is no mention of the word divergence. What we are dealing with here is the 'blatantly obvious pivot extremes' called Reversals which are weaker than those in the oscillators trend. The oscillators posted here cannot show this stronger signal because they were not designed to do so. However they appear to be good at picking the blatantly obvious.

I cannot find any value at all in using the itchy moo cow other than if the cows are lying down the clouds are going to release their precipitation and it may be a good time to plant rice.
  • #615
  • Jun 10, 2016 11:16pm Jun 10, 2016 11:16pm
Hi Nala66,

Quoting Nala66
If we have a so called Regular Divergence on the 5 minute chart we would not be able to see it on the 1 hour chart, this I can understand the divergence is hidden from me if I am trading the 1 hour chart.
I am trading AUD/USD 4 hours chart and wanted to long after it went above 0.73. I saw a Hidden Divergence (a continual signal) on the 1 hour chart and planned my entry. The Divergence is hidden on the 4 hours chart.

Hope this matches and clarifies a bit.
Thanks

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"The markets can remain irrational longer than you can remain solv
  • #616
  • Jun 10, 2016 11:21pm Jun 10, 2016 11:21pm
Just so you know that I know what I am talking about here is my daily GBP/JPY which I have continued to post in other threads

Note at this stage we are exactly at the reversal 50% level and have just bounced off support. The Yen could easily take this down to the next level over the next few days, that is over 500 pips away.
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  • #617
  • Jun 10, 2016 11:37pm Jun 10, 2016 11:37pm
Quoting shyean
Hi Nala66, {quote} I am trading AUD/USD 4 hours chart and wanted to long after it went above 0.73. I saw a Hidden Divergence (a continual signal) on the 1 hour chart and planned my entry. The Divergence is hidden on the 4 hours chart. Hope this matches and clarifies a bit. Thanks {image} {image}
Thanks for replying shyean

There you go now you have a hidden reversal signal (not divergence) on your 4 hour chart.

Divergence and reversals are entirely different things like apples and oranges, the shapes may be similar but there the comparison ends.

Reversal have specific target points whereas divergence does not.

Divergence returns the price to a reversal otherwise know as a DP or Decision Point where upon the market will determine if it is a continuation or not best tested with a triangle breakout as shown in the above chart.

If the market does not return the price to the DP then it continues and ignores the divergence.

Only when the specific targets have been reached does the divergence act as a direction change but it will still return the price to a DP.
  • #618
  • Jun 10, 2016 11:58pm Jun 10, 2016 11:58pm
My apologies there was an error on that last chart I posted because I had been explaining something else to someone else, the middle reversal had been moved and I forgot to put it back.

For those scratching their heads here is the correction.
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  • #619
  • Jun 11, 2016 5:31am Jun 11, 2016 5:31am
Nala66,

I don't think traders of divergence really care what term you use to describe price patterns on their charts.
As long as they are profitable and it works for them, then the pattern called be called any name under the sun.

Also I don't believe they care if what is really happening to price from a philosophical point of view is different to what you think.

Profit is the motive and ultimate measure of success, and if they are making it then the rest doesn't matter.
  • #620
  • Jun 11, 2016 5:37am Jun 11, 2016 5:37am
Quoting chamane
GBP seems to be dropping. Two pairs to watch on the 15 min timeframe. {image}

Hi chamane,

Where can I locate the currency meter pro that you have on one of your charts?

Also can you explain the logic behind your OSMA settings?

Shrips
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