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Hidden divergence

  • #621
  • Jun 11, 2016 8:13am Jun 11, 2016 8:13am
Quoting shrips
{quote} 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
Here is the indicator. There isn't much logic behind the choice of my settings. I started to play with both OSMA and Stochastic oscillators and came up with settings that I think are in sync with each other peaks and bottoms wise. I finally decided to use Fibonacci numbers on both cases.
  • #622
  • Jun 11, 2016 8:27pm Jun 11, 2016 8:27pm
Quoting shrips
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.
OK if nobody cares then why should I bother posting.

I was only trying to help you guys with your analysis so you could profit far more efficiently than you are doing here.

Besides which I was asking Chamane who doesn't even bother to answer, I must smell bad or something.

No skin off my nose.
  • #623
  • Edited 8:21am Jun 12, 2016 8:11am | Edited 8:21am
Quoting Nala66
{quote} OK if nobody cares then why should I bother posting. I was only trying to help you guys with your analysis so you could profit far more efficiently than you are doing here. Besides which I was asking Chamane who doesn't even bother to answer, I must smell bad or something. No skin off my nose.
I am sorry, it doesn't show that you were asking me personally. I thought that the other contributors gave pretty good answers to your concerns and I agree with them. I also agree with you that the term "hidden" is misused, but it is accepted by a majority of traders as dedicated. I would rather use the term "reverse divergence".

Anyway, that semantic issue doesn't change the way I deal with the subject of this thread. I have always been interested in divergences because I am convinced that it works well. I am not the only one:

  1. Alexander Elder: "Divergences are among the most powerful signals in technical analysis". (p. 86 in Elder, A. (2014). The New Trading for a Living, Wiley Trading Series. 286 p.).
  2. George Lane about the Stochastic indicator: "Why dont we take out the word crossover out of it? The crossover happens but that isnt the signal. The signal is divergence". (p. 83 in Smith, C.D. (2010). How to Make a Living Trading Foreign Exchange. John Wiley & Sons inc. 187 p.
  3. Barbara Starr, Ph. D.: "Many traders only learn to recognize the type of nonconfirmation that occurs at market tops and bottoms, which is the classic divergence. But there are other forms of nonconfirmation I call hidden divergence (HD) that, when present, offer additional profit potential". (Star, B. (1996). New Techniques. Hidden Divergence. Stock & Commodities V. 14:7 (285-289)).

For me, divergence is just a heads up signal for a change in momentum. That's why I find Dany's suggestion of using the Ichimoku indicator along with the Fibonacci retracement levels and price trendlines very useful tools for entering a trade. I also add regular divergence on smaller timeframes, engulfing price patterns and more recently I started playing with the Donchian indicator on smaller timeframes when I see a potential reverse divergence developing. Everybody knows that there will always be losing trades, but I believe that a confluence of all those signs at the same time increase the probability of success. A trade in the direction of the trend definitely puts the odds on our side.

I am curious to know more about your observations of the RR 1:3 for hidden divergences. I had never heard about it before.

  • #624
  • Jun 12, 2016 11:39pm Jun 12, 2016 11:39pm
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPY.png Size: 61 KB
  • #625
  • Jun 13, 2016 6:25am Jun 13, 2016 6:25am
A good entry opportunity.

Attached Image
  • #626
  • Jun 13, 2016 12:16pm Jun 13, 2016 12:16pm
Quoting chamane
A good entry opportunity. {image}
Don't forget the trendline before the trade
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: NZD_USD.png Size: 63 KB
  • #627
  • Jun 13, 2016 1:05pm Jun 13, 2016 1:05pm
Quoting dany78
{quote} Don't forget the trendline before the trade {image} {image}
Still waiting for its cross. Thanks.
  • #628
  • Jun 18, 2016 6:11am Jun 18, 2016 6:11am
Here are the opportunities that occurred on the 4HR timeframe this past week. The trigger signs haven't been met yet for a few of them. I chose the patterns that I think are clear. If I have any doubt about it, I do not take the trade. I was not able to trade much this week.

Attached Image (click to enlarge)
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  • #629
  • Jun 18, 2016 7:23am Jun 18, 2016 7:23am
Quoting chamane
Here are the opportunities that occurred on the 4HR timeframe this past week. The trigger signs haven't been met yet for a few of them. I chose the patterns that I think are clear. If I have any doubt about it, I do not take the trade. I was not able to trade much this week. {image}
thanks yu Chamane
  • #630
  • Jun 18, 2016 4:03pm Jun 18, 2016 4:03pm
Quoting dany78
{quote} thanks yu Chamane
'welcome. AUDCAD, CADCHF and CADJPY are certainly worth watching on the 4 HR TF at the start of next week. The CAD seems to be loosing strength overall.
  • #631
  • Jun 18, 2016 7:04pm Jun 18, 2016 7:04pm
Quoting saidvai
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  • #632
  • Jun 18, 2016 10:28pm Jun 18, 2016 10:28pm
Quoting chamane
{quote} 'welcome. AUDCAD, CADCHF and CADJPY are certainly worth watching on the 4 HR TF at the start of next week. The CAD seems to be loosing strength overall.
CAD is so closely related to oil price which has been fluctuating..... will be interesting to see what happens as days pass and there is more oil production from both Canada and Nigeria...
  • #633
  • Jun 20, 2016 3:19pm Jun 20, 2016 3:19pm
Interesting opportunities with the Yen pairs (except GBPJPY) on the 4 HR timeframe. For the next hour, AUDJPY, CADJPY, EURJPY and NZDJPY are on their way to meet trigger signs. CHFJPY and USDJPY have already reached that stage. Those who traded the Sunday GAP with those pairs must be happy right now.

Attached Image (click to enlarge)
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  • #634
  • Jun 22, 2016 9:05pm Jun 22, 2016 9:05pm
I usually prefer when there is a clear trend, but this time I entered on a trend reversal.

Attached Image
  • #635
  • Jun 22, 2016 9:12pm Jun 22, 2016 9:12pm
Quoting chamane
I usually prefer when there is a clear trend, but this time I entered on a trend reversal. {image}

nice.
are you doin this automated ? or you usually do it manually ?!
  • #636
  • Jun 22, 2016 9:18pm Jun 22, 2016 9:18pm
Quoting gnajra
{quote} nice. are you doin this automated ? or you usually do it manually ?!
Manually. I tried a few divergence indicators, but I didn't like what I saw. But with the trigger signs I use, it might be possible to build an EA. I wouldn't use it unless we get a high profitable backtest.
  • #637
  • Jun 22, 2016 9:24pm Jun 22, 2016 9:24pm
Another nice hidden divergence pattern on the 4 HR timeframe.

Attached Image
  • #638
  • Jun 22, 2016 9:28pm Jun 22, 2016 9:28pm
Anothe HD pattern. GBP seems to be gaining strength on every pair. Must be favourable polls for a Remain.

Attached Image
  • #639
  • Jun 25, 2016 6:16am Jun 25, 2016 6:16am
Here were the hidden divergence opportunities on the 4 HR timeframe for this past week. Of course as the patterns were forming near the Brexit vote, it became more risky to trade, especially the EUR and GBP pairs. EURJPY would have been a losing trade before the vote took place.

Attached Image (click to enlarge)
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Attached Image (click to enlarge)
Click to Enlarge Name: Divergence2.png Size: 73 KB
  • #640
  • Jul 1, 2016 6:25pm Jul 1, 2016 6:25pm
I usually show the hidden divergence opportunities of the past week on the 4 HR timeframe, but this time almost all pairs have been affected by the Brexit vote. Since HD is working well in a steady and clear trend and not so otherwise, I did not see any good opportunity. I very seldom trade intraday so I did not check for smaller TF. I am sure it will be better next week.
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