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Divergence

Bearish Divergence explained This is an educational post on OANDA:XAUUSD Look how we can view divergences and predict movements on the underlying. Various peeks and troughs are marked in yellow on the indicators RSI and MFI and the price acton not the chart for Gold In the time frame shown in the chart, you can see a bullish divergence where we see the last yellow circle somewhere in June/July 2019, a new high made on RSI didn't have price action making a new high, which is then followed by a rise in price over the next few sessions. Secondly, after the quick heavy run up, RSI falls sharply indicating the move from overbought position in a downward slop, marked in red, and price actions moves upwards, showcasing a bearish divergence. This is followed by a fall in price over the last few sessions for the recent highs. I have taken the 50 day MA as the replica for the trend line and currently Gold is sitting right below the MA. It will find resistance at the MA, Watch out this space for more on when the next opportunity presents If you like it, please share a thumbs up! Cheers
OANDA:XAUUSDEducation
by LoveForCharts
1
Elliott Wave Analysis using Relative Strength Index, HistogramGreeting, Today I'm going to teach you a technique for analyzing Elliott Waves. After this, you will get a sound understanding of how to analyze Elliott Waves. This tutorial is for you that has an established understanding on the Elliott Wave Theory. If not, this guide could still be useful, but not optimal. To start, you'll have to set up the Relative Strength Index(RSI) and the MACD indicator. This guide analyzing a hypothetical bull trend. It can be used the opposite way, just flip everything from a bull perspective to a bear perspective. First, we want to identify wave-3, as this is the one that stands out. Open a chart, browse through different pairs until you find one where the RSI is clearly above 70 value. If you're uncertain, watch my chart as this is the perfect example. Second, when wave-3 is identified, we want to identify wave-1. Again, we do this by analyzing the RSI for clues. Wave-1 will be the high that hits the 70 level and then reverses BEFORE wave-3. If it doesn't hit 100%, don't worry. As long as it gets close and reverses at or around this level before wave-3, we’re good. Third, we now have identified wave-1 and wave-3. Our next stage is wave-5. We do this the same way as we did with wave-1. The fifth wave will be the high that hits the 70 level AFTER wave-3. It is very important that wave-1 happens before wave-3 and that wave-5 happens after wave-3. As with wave-1, this wave does not need to hit the 70 level 100%, as long as it's close. Wave-5 does not need to reverse as this would ruin our trade, because it would be to late for us to enter. Fourth, with all the impulse waves identified, we need to identify wave-2 and wave-4. Fortunately, this is the easy part. These waves will be the lows between the impulse waves(1-3-5). Wave-2 will be the low between wave-1 and wave-3, and wave-4 will be the low between wave-3 and wave-5. Now to the fun stuff. Draw an arrow from the top of wave-3 and wave-5. Usually, the fifth wave will be higher than the third wave, so this arrow should be pointing upwards. If we now draw an arrow from the same point on the RSI (The highs we discussed earlier), this should be point downwards. If the pair you're analyzing comply with these criteria, you can continue. We now want to do the same for wave-2 and wave-4, but this time we compare the lows and not the highs (as wave-2 and wave-4 is corrective). Draw an arrow from the end of wave-2 (the lowest point) to the low of wave-4(the lowest point). This must be pointing upwards, if not. Find another pair and start over. Draw an an arrow from the associated points on the histogram. If you're uncertain about where to draw the arrow from, draw a vertical line from the bottom of wave-2 and the bottom of wave-4. Your chart should look like mine now. We should have an arrow drawn from the top of wave-3 to the top of wave-5 on the price chart, an arrow from the top of wave-3 to the top of wave-5 on the RSI, an arrow drawn from the bottom of wave-2 to the bottom of wave-4, and lastly an arrow drawn from the bottom of wave-2 to the bottom of wave-4 on the histogram. If your chart aligns with these criteria, you’ve successfully identified a beautiful high probability set up. Now for the actual trade. We want to enter the trade at the best price possible. This entry is often between the 100% - 124% extension of wave-4. We can get clear levels by drawing a Fibonacci Retracement tool from the top of wave-3 to the bottom of wave-4, and then insert our chosen values (100%, 113%, 124%). If the price hits these levels, and fulfill all the criteria mentioned above, we can confidently short the market. If you don't believe me, do this technique on different pairs and timeframes, and watch the magic happen. This technique does not guarantee a full-blown change in trend but does indicate that the market is wearing out and probably will reverse in the time to come. My preferred Take-Profit is 23.6%, 38.2%, and 50% retracement of the whole 1-5 wave. Stop-Loss should be between 141%-161.8% of the wave-3 to wave-4 Fibonacci Retracement tool. I hope you enjoyed this guide. I know it's a tough read. If I get good reviews, I'll release more guides like this In the future.
BITSTAMP:BTCUSDEducation
by mariusbless
3
Trading on divergence signalsEDUCATIONAL PURPOSES: There are several indicators that one can employ during the course of analysis. One common indicator will be the Relative Strength Index. What can you draw from this indicator? Overbought and Oversold signals! However, one can also use this indicator to spot divergences in the price and the relative strength! Above are 3 examples of RSI divergences: AUDCAD, AUDSGD and GBPAUD. The main idea is to look out for differing directions between the price and the RSI within the same period. As we can see from AUDCAD and AUDSGD, price was creating lower lows while RSI was creating higher lows. This is an example of a BULLISH RSI DIVERGENCE, and price will soon start correcting. In the case of GBPAUD, another higher high on the price carves out a lower high on the RSI. This shows that there is a BEARISH RSI DIVERGENCE, and price will soon start correcting. Spotting divergences helps with timing of trade entries (whether it is too late or too early), exiting of positions and/or adding more positions. You can also use this as a trigger for a trade (i.e. a Long trade in AUDCAD, or a Short trade in GBPAUD). The time frame that you use to spot divergences will affect how long you have to wait for price to start correcting (i.e. shorter time for H1 as compared to Daily). **One important point to note when spotting or trading on divergences: Observe for price action in line with your bias (bullish price action for bullish RSI divergence, vice versa). RSI divergences can fail should it carve a higher high or lower low that is in line with price.
Education
by TraderMozo
10
USDCAD 120min CCI turn signals diver retest hi TLBThis could have been posted 2-3 hr ago but trading comes first. There are still pips available, but more importantly the turn signals were so clear that the value is in the tutorial. The first warning that uptrend was waning came with strong CCI divergence from price Second, there was an abc down which corrected back up to retest the high (following divergence) at the CCI high of the price hi retest, the CCI had a short signal with slanted rooftop. Together, those were a first signal short. Third, CCI crossed down thru an up-trendline giving a later signal short. Reversal signal would be when CCI crosses back up thru a down-trendline on CCI (not shown)
Education
by nicker
Quick guide on three buy/sell position suggestion scripts.+ Cyber Ensemble Buy/Sell positions signaling is derived from an optimized scoring of a large number of conventional indicators. (Blue/Purple plus Background HeatMap) + FG-Divergence is based on my own modified version a MACD style oscillator, with its own accompanying Momentum and Acceleration oscillator. (Light Green/Red) + PRISM Signals is based on PRISM, a pSAR derived oscillator coupled with its Momentum/Acceleration/Jerk Oscillator as well as pSAR based RSI and StochRSI. (Bright Green/Red) — For best results, users can tweak the parameters and enable/disable specific tests and scoring Thresholds for a specific chart and timeframe, and checking how well they perform wrt historical trends. Timeframe specific presets will be added in the future when I have more time. Please do feel free to play around with the parameters and share them. If they are good, they may be added as a preset in future updates with you credited. These scripts are freshly made, and for now, my focus is to slowly refactor and improve on the code, and tidying up the ordering of the inputs to make them easier for users to navigate and understand what each of them do. In the future, once things are sufficiently improved, I aim to include alert features and release a proper “strategy version” as well, and I may post up a clearer user guide for each one of them.
BITSTAMP:BTCUSDEducation
by cybernetwork
7
Potential scalping set up for litecoinIf you've seen my previous analysis about litecoin which came up near the APEX and the golden pocket zone , you will realize that based on current chart, the price has broken down the support zone on daily chart and it means that we could short it. but wait, remember the break out rules which says that every support or resistance which has been broke, there will be 1 more action to retest the previous support or resistance as a confirmation. in this case, I saw the possible long set up for scalping potential. Beside, I see a bullish divergence has occur on 1 hour chart. I will open long position when the price can break out of current resistance trend line and targeting minimum to .382 fibonacci retracement area.
BITFINEX:LTCUSDEducation
by julio24albert
Trading Divergences - An Alternate View for New TradersTrading divergences is a very common technical analysis strategy, but it comes with one big problem: the most common divergences (not hidden) trade against the trend. This means that new traders can often get into trouble by constantly looking for, and trading, against a dominant trend. Here's an idea to help you become more profitable over the long-term: identify divergences on your chosen momentum indicator, but only trade on trend continuation signals. I'm not saying you need to do this forever, as once you're experienced you can trade both pullbacks and continuations - but doing so requires multiple layers of confirmation, and a lot of knowledge/planning/experience. By trading trend continuation signals after divergences, you're stacking the odds in your favour by going with the dominant trend. You're also training your eye to see divergences, and seeing how the markets react to divergences. For new traders this can be a valuable lesson in the power of momentum in financial markets. So, what are trend continuation signals? It depends on your chosen momentum indicator, so I can only provide general ideas; you need to adapt things according to what you're using. My chart contains a custom momentum indicator, loosely based on the RSI. However, it's far smoother than the RSI, so I can reliably trade precise signals (e.g. for me, a cross of 0). On the RSI, you may choose something a bit further down the scale, for example, a cross below Oversold (20/30). If you're using a Stochastic indicator, you may trade a cross below Overbought (70/80). If you don't understand why I'm suggesting you trade signals at the opposite end of the scale for RSI and Stochastic, let me know. Hopefully this all makes sense, and remember that it's just an idea if you're a new trader and struggling to make good trades. Let me know if you have any queries. DD
Education
by DreamsDefined
4
AUDNZD long?Kept my eye closely on this pair since last year since the price was creeping towards it’s LOWEST levels. Managed to catch ALL the moves over the space of 3-6months Flash crash at the start of the year, leading to the divergence with an impulsive move to zone (1.070), which is our TP. Since then, it’s following a descending channel (flag) which is a continuation price action pattern. \u2028A bullish wave is expected from resistance turned support @ mirror level 1.4150, which is where our SL will be set. Trade invalidated if it breaks this zone. SCENARIO: SL: 1.4150 TP1: 1.070 TP2: OPEN TARGET: 130 - 500 pips ESTIMATED TIME: 7-25 days
Education
by Suz_A4002
How MacD Plays An Important Role In Divergence?Hey Traders, Here is my idea about divergence by using macd. First thing first, trend never stays in one direction forever. Sometimes it moves up and sometimes it moves down but how do we know that in anytime of near future we are expecting a reversal. In the pic below, we can clearly see that on AUDUSD trend is massively down from arrow area and everyone is looking to sel l this pair. And every time when this down trend pullbacks we get a better price to sell (as if we are getting a higher price to sell) but think for a minute, when everyone is looking to sell and waiting for a pullback to happen so they can join the massive downtrend who will be the buyer? And how long we can sell a currency? Obviously, it can't remain in one direction (sell in this case) forever. Now in the next picture notice one thing when the price starts to fall down we see a LL and LH and we start selling this AUDUSD pair then another LL and LH and another sell then another LL and LH and another sell. Now we all now that we are making a LL and LH so when market is making LL and LH who will be interested in buying? NO ONE... After first 4 big pushes down, notice one thing all trend pushes seem to be weaker than they were initially and pullbacks are coming in deep. When momentum starts to fade out that will be the first sign that market may REVERSE in near future. A healthy trend always have momentum and health in it. If momentum starts to fade out and trend starts to loose its health what happens that those trend pushes starts to become smaller and weaker and pullback starts to come in deep. This is when Macd comes in handy. In the next pic, you will see after being in a downtrend for so long when you get the first sign of trend is now loosing its power (momentum and health) how you can use macd to confirm. This pic shows that when we were making LL and LH, on Macd we were also getting the same thing, but at the very right bottom of the pic we can see that we had LL and LH but on macd , story was totally different, we had HH and HL so this is the 2nd sign of possible trend reversal and this is time when Macd comes in handy on finding the reversal with divergence. So, in order to confirm we just have to go 1 time frame lower which is 4h in this case to see either we have a HH and HL on 1 smaller tf or not. We can see in above pic after ranging for quite long on 4h we finally had a HH and HL and then the buyers started to kick in. After divergence, buyers came in hot.
Education
by TheFalconTraderOfficial
1
How divergence plays an important role in trend reversals.This is my very first time I am writing any idea about how I read the charts. So my first idea is going to be on Divergence and how it plays an important role in trend reversal. First thing first, trend never stays in one direction forever. Sometimes it moves up and sometimes it moves down but how do we know that in anytime of near future we are expecting a reversal. In the pic below, we can clearly see that on AUDUSD trend is massively down from arrow area and everyone is looking to sell this pair. And every time when this down trend pullbacks we get a better price to sell (as if we are getting a higher price to sell) but think for a minute, when everyone is looking to sell and waiting for a pullback to happen so they can join the massive downtrend who will be the buyer? And how long we can sell a currency? Obviously, it can't remain in one direction (sell in this case) forever. Now in the next picture notice one thing when the price starts to fall down we see a LL and LH and we start selling this AUDUSD pair then another LL and LH and another sell then another LL and LH and another sell. Now we all now that we are making a LL and LH so when market is making LL and LH who will be interested in buying? NO ONE... After first 4 big pushes down, notice one thing all trend pushes seem to be weaker than they were initially and pullbacks are coming in deep. When momentum starts to fade out that will be the first sign that market may REVERSE in near future. A healthy trend always have momentum and health in it. If momentum starts to fade out and trend starts to loose its health what happens that those trend pushes starts to become smaller and weaker and pullback starts to come in deep. This is when Macd comes in handy. In the next pic, you will see after being in a downtrend for so long when you get the first sign of trend is now loosing its power (momentum and health) how you can use macd to confirm. This pic shows that when we were making LL and LH, on Macd we were also getting the same thing, but at the very right bottom of the pic we can see that we had LL and LH but on macd, story was totally different, we had HH and HL so this is the 2nd sign of possible trend reversal and this is time when Macd comes in handy on finding the reversal with divergence. So, in order to confirm we just have to go 1 time frame lower which is 4h in this case to see either we have a HH and HL on 1 smaller tf or not. We can see in above pic after ranging for quite long on 4h we finally had a HH and HL and then the buyers started to kick in. After divergence, buyers came in hot.
Education
by ajwadsaleem
How to EASILY detect DIVERGENCE by @bakatoolsHere is an easy way to detect that there is a divergence and price will break soon. First, we add a RSI indicator to chart, then drag it from below onto the main chart where the candles are (overlay). To avoid blocking vision, you can open RSI's style and hide the background, make the line thicken. Now is how it works. Normally, you will notice RSI goes along with price, if candles go up, RSI go up; candles go down, RSI go down. It will be not much different from the price. But, if you notice that the RSI line which had been running above the candles, now suddenly running below the candles and it starts SEPARATING AWAY from the candles (as illustrated above), and vice versa, that is the SIGN. You can now draw a line to connect 2 highest (or lowest) candle peaks, and then draw another line to connect 2 highest (or lowest) RSI peaks. If they CROSS each other, that is a DIVERGENCE. And price will soon break in reversal. Result is the break in ETH uptrend today as we all saw. Is it easy enough? Share your comment below. Thanks.
Education
by bakatools
2
Oscillator Divergence Histogram Setup update 1Link to indicator Link to sister indicator Setup video Early warning alerts V1.02 -Fixed missing alerts -Added possibility to alert if more than X number of oscillators have a similar divergence Hidden Bearish Divergence on any Selected Oscillator Hidden Bearish Divergence Developing on any Selected Oscillator Regular Bearish Divergence on any Selected Oscillator Regular Bearish Divergence Developing on any Selected Oscillator Regular Bullish Divergence on any Selected Oscillator Regular Bullish Divergence Developing on any Selected Oscillator Hidden Bullish Divergence on any Selected Oscillator Hidden Bullish Divergence Developing on any Selected Oscillator Hidden Bearish Divergence on multiple oscillators >= value in input 'Alert Options 1)' Hidden Bearish Divergence Developing on multiple oscillators >= value in input 'Alert Options 1)' Regular Bearish Divergence on multiple oscillators >= value in input 'Alert Options 1)' Regular Bearish Divergence Developing on multiple oscillators >= value in input 'Alert Options 1)' Regular Bullish Divergence on multiple oscillators >= value in input 'Alert Options 1)' Regular Bullish Divergence Developing on multiple oscillators >= value in input 'Alert Options 1)' Hidden Bullish Divergence on multiple oscillators >= value in input 'Alert Options 1)' Hidden Bullish Divergence Developing on multiple oscillators >= value in input 'Alert Options 1)' I can code it so the new alerts allow the detected divergences to be within X bars of each other if anyone wants that as an option?
BITMEX:BTCUSD.PEducation
by SemiQuant
Making 112%+ Divergence Trading Bitcoin Long TermToday we have a fun one because I love making money. There is nothing better than nailing down an awesome trade and today I am going to teach you about something called 'divergence'. It might seem a bit complicated at first but it will be well worth it. As you can see in the BITFINEX:BTCUSD chart above, the prediction is stupid accurate. The Basics You are going to notice that I have a few lines drawn on the chart above and they tell you buy/sell scenarios. The return you would have had by simply following this would be INSANE! So I want you to keep an eye on it in the future. Here is what you need to know: (Disclaimer: Trading is never perfect. I am not saying there are not scenarios that are exceptions to the rules I am about to talk about. What I am saying is this stuff is gold and will make you money...so pay attention) So divergence can be done with any indicator but today I am using the RSI. Bullish Divergence (aka when to Buy): When the price created a lower low but the RSI creates a higher high - So you can see at all the 'buy' points the price of COINBASE:BTCUSD is making a lower low but the RSI indicator is making a higher high. Bearish Divergence (aka when to SELL): When the price created a higher high but the RSI creates a lower low - So you can see at all the 'sell" points the price of COINBASE:BTCUSD is making a higher high but the RSI indicators is making a lower low. Right now COINBASE:BTCUSD looks good based on divergence! It is moving in that positive direction and the price and RSI are both making higher highs. I will keep you updated on this thread for new developments. Oh yeah, before I forget...this can be used on short time frames! Be smart with it but it can be SUPER powerful. Let me know if you have any questions or need any help. Cheers!
BITFINEX:BTCUSDEducation
by UnknownUnicorn1542001
5
The system is one, the results are different. Why?The system is one, the results are different. Why?  It is checked by practice - if several traders (approximately the same level) work on the same system, the results will be completely different. Why? Psychology with problems of a personal character comes to the fore. People have different psychotypes, different attitudes to risks, different measures of responsibility for results, different levels of perception of the current state of the market. The same "pain threshold" for drawdown is individual. Therefore, in the process of training, along with the description of the trading system, more attention is paid precisely to the analysis of each student of personal statistics. Only personal statistics suggest the strengths and weaknesses of each trader. For example, one is excellent at trading in the first half of the session, by the end of the day the results are falling. Another may be better able to trade on VSA patterns or technical analysis, but the levels and clusters are bad. On a large amount of data (sufficient statistical sampling) and doing performance analysis with correction of the rules of trade for everyone. Knowing your strengths and weaknesses is simply bound to improve your trading. Even the introduction of the rule-just DO NOT TRADE what more often causes a loss of 100% will lead to an increase in the expectation. And to trade ONLY their statistically profitable situations))). No countless "magic" systems and indicators, multiple viewing of video trades of other professionals (they know their advantages, and you do not own) will not give a positive result. Therefore, working on yourself is the cornerstone of profitable trade. All good and right decisions!   Now the bitcoin is a bearish divergence on open interest. The hidden divergence on CMO has worked successfully.
BITFINEX:BTCUSDEducation
by fvb
2
OPEN INTEREST DIVERGENCE cryptocurrency The indicator of open interest is a little used indicator in the market of crypto currency. However, this is a mistake. After all, in fact, no indicator will provide a clearer signal of confirmation of the strength of the trend or its reversal. Open interest is one of the first indicators used to conduct technical analysis. It is not based on any formulas. It only displays the number of open positions for a given underlying asset. An even stronger signal is the divergence of open interest and a price chart. Divergences for a short position look at the maximum peaks of prices and open interest. Divergences for a long position look at the lowest values Experienced it is necessary to choose the right period of open interest, for experiment we took one of the Fibonacci numbers The example shows how the indicator last worked For all questions regarding the indicator - write to the e-mail address or to private messages, the indicator is for all popular coins in relation to the dollar and to BTC
BITFINEX:BTCUSDEducation
by fvb
9
Chaikin Money Flow (CMF) Chaikin Money Flow (C.M.F.) Definition Chaikin Money Flow (C.M.F.) is a technical analysis indicator used to measure Money Flow Volume over a set period of time. Money Flow Volume is a metric used to measure the buying and selling pressure of a security for single period. C.M.F. then sums Money Flow Volume over a user determined look-back period. Any look-back period can be used. However, the most popular settings would be 20 or 21 closes. In the Chaikin Money Flow's value fluctuates between 1 and -1. C.M.F. can be used as a way to further quantify changes in buying and selling pressure and can help to anticipate future changes and therefore, trading opportunities. Chaikin's Money Flow's value fluctuates between 1 and -1. The basic interpretation is: When C.M.F. is closer to 1, buying pressure is higher. When C.M.F. is closer to -1, selling pressure is higher. Buying and Selling Pressure can be a good way to confirm an ongoing trend. This can give the trader an added level of confidence that the current trend is likely to continue. However, just becaue buy/sell pressure is in favor of the current trend it does not mean that levels shown can sustain the direction if it is advancing or declining into the opposite direction. During a Bullish Trend, continuous Buying Pressure (Chaikin Money Flow values above 0) can indicate that prices will continue to rise. During a Bearish Trend, continuous Selling Pressure (Chaikin Money Flow values below 0) can indicate that prices will continue to fall. The C.M.F. is designed for use with the On Balance Volume (OBV) and Chaikin Oscillator in addition to other volume indicators. See: www.tradingview.com(CMF) Example In this example, I will focus on a Bearish scenario since most traders tend to be able to spot Bullish scenarios easily. As can be seen on the 6 hour chart above, the divergences are typically pretty clear. At the C.M.F. peak shown by the vertical red line, we had a nice rally prior. At the C.M.F. peak we dropped for 18 hours and then started a new rally. At this point, the C.M.F. began to show less buy pressure that did not coincide with the new price high since its prior peak. In this case, I would monitor smaller time frames (for quicker reaction data) to see if the volume picks up. It did not; creating a drop to match the actual buy pressure decline. Move forward to the price action shown by the vertical blue line. We attempted another rally with less than convincing buy pressure on the C.M.F.. Price action created what some traders call a double top that could not be sustainable due to the declining buy pressure on the C.M.F.. For my settings here I have left the stock inputs at 20 and changed the view to area with breaks. Conclusion The Chaikin Money Flow (C.M.F.) is great for identifying hidden price movements. As with all indicators you should use it in conjunction with similar indicators (Volume based in this example) and also confirm on multiple time frames. The C.M.F. has been a great tool that I have used over the years to identify early price prediction and movement. I will focus on indicators best used in conjunction with the C.M.F. in my next few educational ideas. Click like on this if you would like to learn about more trading tools. Thanks!
BITSTAMP:BTCUSDEducation
by Nick_Core
19