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In order for divergence to exist, price must have either formed one of the following:
Higher high than the previous high
Lower low than the previous low
Double top
Double bottom
Don’t even bother looking at an indicator unless ONE of these four price scenarios have occurred.
Higher high than the previous high
Lower low than the previous low
Double top
Double bottom
Don’t even bother looking at an indicator unless ONE of these four price scenarios have occurred.
Please keep in mind that we use divergence as an indicator, not a signal to enter a trade!
It wouldn’t be smart to trade based solely on divergences since too many false signals are given.
It wouldn’t be smart to trade based solely on divergences since too many false signals are given.
It’s not 100% foolproof, but when used as a setup condition and combined with additional confirmation tools, your trades have a high probability of winning with relatively low risk.
There are a bunch of ways to take advantage of those divergences.
There are a bunch of ways to take advantage of those divergences.
One way is to look at trend lines or candlestick formations to confirm whether a reversal or continuation is in order.
Another way is to make use of momentum tricks by watching out for an actual crossover or waiting for the RSI to move out of the overbought/oversold region.
Another way is to make use of momentum tricks by watching out for an actual crossover or waiting for the RSI to move out of the overbought/oversold region.
You can also try drawing trend lines on the RSI too which is my favorite also
With these tricks, you can guard yourself against false signals and filter out those that’ll be very profitable.
On the flip side, it is just as dangerous trade against this indicator.
With these tricks, you can guard yourself against false signals and filter out those that’ll be very profitable.
On the flip side, it is just as dangerous trade against this indicator.
Regular divergences can help you collect a big chunk of profit because you’re able to get in right when the trend changes.
Hidden divergences can help you ride a trade longer resulting in bigger-than-expected profits by keeping you on the correct side of a trend.
Hidden divergences can help you ride a trade longer resulting in bigger-than-expected profits by keeping you on the correct side of a trend.
The trick is to train your eye to spot divergences when they appear AND choose the proper divergences to trade.
Just because you see a divergence, it doesn’t necessarily mean you should automatically jump in with a position.
Cherry pick your setups and you’ll do well.
Just because you see a divergence, it doesn’t necessarily mean you should automatically jump in with a position.
Cherry pick your setups and you’ll do well.
