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Divergence

How to use RSI and MACD In trading?Hi every one *Definition of RSI: This indicator Is momentum base indicator. The biggest difference with momentum is that there are two line which indicate that: Is the price in the oversold or overbought area or not? We can easily compare the tops and bottoms of every instrument that we like! There is not much difference between RSI and Stochastic oscillator only that there is one line in RSI! Remember every Indicators shows the future of the market! **Full explanation of MACD: Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD called the "signal line," is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. you may buy the security when the MACD crosses above its signal line and sell—or short—the security when the MACD crosses below the signal line. Moving average convergence divergence (MACD) indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls. Moving average convergence divergence (MACD) is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. MACD triggers technical signals when it crosses above (to buy) or below (to sell) its signal line. The speed of crossovers is also taken as a signal of a market is overbought or oversold. MACD helps investors understand whether the bullish or bearish movement in the price is strengthening or weakening. The MACD has a positive value (shown as the blue line) whenever the 12-period EMA (indicated by the red line) is above the 26-period EMA (the blue line) and a negative value when the 12-period EMA is below the 26-period EMA. The more distant the MACD is above or below its baseline indicates that the distance between the two EMAs is growing. The MACD has a positive value (shown as the blue line) whenever the 12-period EMA (indicated by the red line) is above the 26-period EMA (the blue line ) and a negative value when the 12-period EMA is below the 26-period EMA. The more distant the MACD is above or below its baseline indicates that the distance between the two EMAs is growing. MACD is often displayed with a histogram which graphs the distance between the MACD and its signal line. If the MACD is above the signal line, the histogram will be above the MACD’s baseline. If the MACD is below its signal line, the histogram will be below the MACD’s baseline. Traders use the MACD’s histogram to identify when bullish or bearish momentum is high. ***RSI VS MACD: The relative strength indicator (RSI) aims to signal whether a market is considered to be overbought or oversold in relation to recent price levels. The RSI is an oscillator that calculates average price gains and losses over a given period of time. The default time period is 14 periods with values bounded from 0 to 100. MACD measures the relationship between two EMAs, while the RSI measures price change in relation to recent price highs and lows. These two indicators are often used together to provide analysts a more complete technical picture of a market. These indicators both measure momentum in a market, but, because they measure different factors, they sometimes give contrary indications. For example, the RSI may show a reading above 70 for a sustained period of time, indicating a market is overextended to the buy side in relation to recent prices, while the MACD indicates the market is still increasing in buying momentum. Either indicator may signal an upcoming trend change by showing divergence from price (price continues higher while the indicator turns lower, or the other way around. The DEFINITION of Divergences! We hope that you've learn something with this post . Have a nice day and Good luck.
COINBASE:BTCUSDEducation
by CobraVanguard
10
The DEFINITION of Divergences!Hi every one So in this post we want to talk about a thing that If you've been following us you would've see a lot of it ! we wanna talk about Divergences! and how to use them to our advantage! there 4 kind of divergences in total which we will describe one by one! 1-regular Bearish Divergence (-RD) 2-regular Bullish Divergence (+RD) 3-Hidden Bearish Divergence(-HD) 4-Hidden Bullish Divergence(+HD) first let's talk about the effects of divergences and than get into each one. divergences are strong signals that will reassure us of the continuation of the trend or the ending of them! so let's get into each one! note that the trend is pretty important in finding divergences! for finding regular divergences on a bullish trend we must look at the tops and in a bearish trend we must look at the bottoms. for Hidden divergences though we must look at the bottoms (in a bullish trend ) and tops (in a bearish trend) so let's get into it! 1.regular bearish divergences (-RD): these divergences accrue when the tops are higher than each other(in a bullish trend),but on RSI or MACD indicators the tops are lower or in the same position next each other (in a bullish trend) in this situation we can be sure that the trend is about to change and start the bearish movement at least for a while! these are examples which clearly show the effect of (-RD) on the trend of the market. 2-regular bullish Divergence (+RD) : this divergence is accrued when the trend is bearish (bottoms are lower than each other ) but on RSI or MACD indicators the Bottoms are higher or next to each other. in this situation we can come to a conclusion that the trend can't be bearish for ever and the trend must change! this is an example for (+RD) which you can see It's effect on the market! 3-Hidden bearish Divergence(-HD):The tops are lower than each other ( in a bearish trend) but the tops on MACD or RSI indicator are higher or in the same position next to each other in this situation we can be sure that the trend can still be bearish . this is an example for(-HD) : 4-Hidden Bullish Divergence(+HD): these divergences accrue when the bottoms of a bullish trend are higher than each other but on the MACD or RSI the bottoms are lower or in the same position next to each other in this situation we can be sure that the bullish trend can still continue! this is a clear example of (+HD) and It's effectiveness! We hope that you've learn something with this post . Have a nice day and Good luck.
BITSTAMP:BTCUSDEducation
by CobraVanguard
37
The Regular Divergence (2) Stock price is lower low, but indicator is higher low. The price touches the support trend line. Tips: This is index, not a stock. But the tips should apply as well. 2013 dec 13, price and stochastic have divergence. Stochastic is to value price momentum. The divergence is a regular divergence. Means the price will bouce back. Here is for price lower low, but indicator higher low. Stochastic works only for a range price move. For strong trend, not working. Here the indicator value is very low, and the stock not in a strong trend swing, means oversold. More probably to bounce back. The stock runs in a very long range. The price drops almost on the support trend line. Over all these, a strong buy hint is here.
TVC:UKXEducation
by yunwangvvv
Education - What are divergences and how do I use them? What are divergences and how do I use them in trading? A divergence usually shows the trader that the price is moving in the opposite direction to the indicator (or vice versa). To find a possible divergence in the price you can use various indicators (MACD, Stochastic, Momentum, etc.) I will limit myself to the Momentum indicator, because I use it myself in my trading. What does a divergence say? As already mentioned, the indicator shows me a contrary movement to the price, related to the momentum indicator this means for example: The price rises and forms a new high, but the momentum indicator forms a lower high in the indicator itself compared to the previous PRICE HIGH How do I use a divergence? A divergence can be used in many ways if you know what to do with the information gained. In my opinion, this also depends on the chosen indicator, at least in terms of the information value I get from the divergence. If one is able to identify a divergence correctly, one receives a kind of "warning", in my opinion a divergence by itself does not represent an action signal, but it warns me that in the case of the momentum indicator it comes to a trend slowdown although the price continues to rise. What is to be paid attention to here? -> As mentioned, a divergence by itself is in my opinion NOT a TREND SIGNAL, but a warning or information around which I can now supplement or adjust my trading. -> Very important, there are two ways that one "bends" the divergence to right once the setting of the indicator is crucial, since each trader uses other settings, it is important not to change these in search of a divergence so that one is formed. ->Furthermore, it is important to consider the time unit under consideration, a divergence occurring in H1 is much less meaningful than one in D1. Summary: Divergences are a possibility to add important information to one's trading at an early stage in order to forecast possible price changes that have not yet occurred. They do not represent action signals on their own.
BEducation
by SystemTrader-SNP
Ultimate Divergences Types Cheat SheetHello, traders! This is a cheat sheet for divergences defining between the price and oscillator. As the oscillator the RSI, Stochastic, MFI, CCI, MACD and other indicators can be used. Regular Bullish Divergence The price shows lower lows, oscillator - higher lows. This is the sign of downtrend weakness and potential reverse to the uptrend. Regular Bearish Divergence The price shows higher highs, oscillator - lower highs. This is the sign of the potential reverse from the uptrend to the downtrend. Hidden Bullish Divergence The price shows highers lows, oscillator - lower highs. This is the uptrend strength sign, it is going to continue. Hidden Bearish Divergence The price shows lower highs, oscillator higher highs. This is the downtrend strength sign, it is going to continue. Try this powerful tool in your analysis and share your results in comments! DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions.
Education
by Skyrexio
12
4 TYPES OF DIVERGENCE There are basically two types of divergence trend continuation and trend reversal 1. trend reversal there are two types of divergence a. regular bearish divergence :- price makes higher high and indicator makes lower high b. regular bullish divergence :- price makes lower low but indicator makes higher low. its time for reversal. 2. in trend continuation there are further two type of divergence :- a. hidden bearish divergence :-which means when price make lower highs but indicator makes higher high it is sign of trend continuation . b. hidden bullish divergence :-which means when price make higher lows but indicator makes lower lows it is sign of trend continuation.
Education
by laddi
How to trade <<Divergence>> in the market?Hello, friends! I have prepared a very important and informative post for You. I hope you'll like it♥️ Let's talk about Divergence🧐 The word divergence comes from the Latin "divergere" - divergence, deviation. Divergence is a situation when the movement of the indicator doesn't match the movement of the price. Usually, divergence happen when, for example, the market has reached some new levels, but the indicator cannot reach its previous values. Or, the opposite situation is possible, when the market dropped below a certain level at which it stopped earlier, while the indicator can't reach its previous value. This situation indicates, that the latest market movement is not reliable and is not supported by a large number of participants. So, almost always, after such a breakout in the market, either a reversal or a flat, or it can be a short-term stop followed by a continuation of the trend. There are two main types of divergence: Bearish. When there is a higher price high with a lower high of the indicator. In this case, a down trend reversal is likely. Bullish. When the level is a lower price low with a higher low on the indicator. In this case, we forecast a trend reversal upward. What is the practical significance of divergence? What is the practical significance of divergence? In practice, it allows you to exit the market in a situation when, with long-term growth, we see the threat of a reversal. Divergence tells you exactly where this movement should start. This allows you to enter the market on time and exit on time. This signal is so significant, that even if a trader uses only fundamental analysis and doesn't use indicators, needs to start at least one oscillator to watch the divergence. Thus, the appearance of a divergence may indicate the end of the current movement. Usually, the appearance of a divergence may indicate the end of the price movement and a possible strong price reversal or correction. Divergence is an important and strong signal. As with other patterns and signals, the higher timeframe, the more likely it is! Now let's talk about classes of Divergence Class A Divergence The weakest type of divergence. Talking about a slow, gradual reversal. In the case of a bearish divergence, the indicator shows a lower high at a new high on the chart. For a bullish, on the contrary - we see a new price low with a higher low on the indicator. ❌It's not recommended to open trades on such a signal; it's better to wait for additional confirmation. Class B Divergence The price forms a double top, while the indicator shows a lower high - that's true for a bearish divergence. For bullish - we see a double bottom on the chart and the indicator shows a higher low. Class C Divergence The weakest species. Usually formed in a volatile market. ❌It's better to avoid such signals. If the price creates a higher high, and the indicator shows a double top, it's a bearish divergence C. If the chart shows a lower low, when the indicator shows a double bottom, it's a bullish divergence C. Hidden Divergence In addition to the types of divergence discussed above👆🏼, there is also a hidden one. It's even more effective than those listed above, although it appears quite rarely. Enter on such a signal only in the direction of the current trend.📌 If you see a lower price high with a higher high of the indicator, it is a bearish hidden divergence. It is true for a bullish to find a higher low on the chart with a lower low on the indicator. What conclusions can we draw? 🔸The presence of a Divergence often, but not always, means a trend reversal💡 🔸Divergence is a relative signal that depends on the chart time frame, and the the type and indicators. 🔸It will not be possible to determine the ideal entry moment, therefore it is necessary to use also other indicators and patterns. 🔸This strategy works in theory on all instruments, but in practice it is suitable for those that tend to long-term trends without corrections. If You have any questions - I'm waiting for You in the comments) Stay in touch with me💋 Always sincere with You🧡 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
25
EDUCATION: Money Flow Index (MFI)Hello, dear subscribers! The topic of this article is Money Flow Index Strategy (MFI). Definition This is the oscillator type indicator, which looks like RSI, but takes in account the volume. Thus it demonsrates not only the price momentum, but also the money volume. It is calculated as a ratio of the positive or negtative money volume divided by the total money flow. MFI indicates the overbought and oversold conditions. The asset is overbought when its value is above 80 and oversold, when below 20. The strategy Let's take a look at how to execute the long positions. Initially we should make sure that the market is in global uptrend now. For this purpose we will use the 200 period SMA. If the price is above the SMA, which has a positive slope the market is in uptrend now. The second step is the bullish hidden divergence identification. As we told in the previous education article the hidden bullish divergence with the oscillators means the uptrend continuation. The third point of this analysis is that the asset now is in oversold zone according to MFI.
Education
by Skyrexio
How To Download Divergence+ I get a lot of private messages about divergence+, a divergence indicator that also gives insanely accurate buy and sell signals. It is so accurate the creator charges a monthly subscription for the indicator. It cost $15 a month and for me personally, with the gains I have made... It is has already paid itself off for the remainder of my life and I am young! Here are instructions on how to download 1. View my account [Myantman101} 2. View who I am following and click on Market Scriptors 3. Send them a private message requesting access to D+ 4. Follow their instructions and use as desired Hope this indicator helps everyone in their analysis/trading decision making
NASDAQ:AMZNEducation
by Myantman101
5
EDUCATION: Hidden Bullish DivergenceToday we consider very powerful technical analysis tool - the Divergence. Definition The divergence is a situation when the price change is not supported by the oscillator. There are four types of divergences: 1)Regular bullish - the price shows lower highs, while the oscillator shows higher lows 2)Hidden bullish - the price shows higher lows, while the oscillator shows lower lows (you can see on the chart) 3)Regular bearish - the price shows higher highs, while the oscillator shows the lower highs 4)Hidden bearish - the price shows lower highs, while the oscillator shows the higher highs Divergence Trading Rules Let's consider the market uptrend situation. If there is the hidden bullish divergence it means the uptrend continuation. In case of regular bearish divergence there is a high probability of trend reverse from uptrend to downtrend. Another situation is when the market is in downtrend. The regular bullish divergence in this situation can be the evidence of trend reverse in the future. In case of hidden bearish divergence the downtrend will continue with high probability. Indicators You can search the divergences not only with Stochastic RSI. Other oscillators are also suites great here. For example, CCI, RSI, Volume oscillator, MACD and other.
Education
by Skyrexio
1
How I Analyze Stocks Part 2 Welcome to the continuation of analyzing NVDA, many of you may be familiar with this feature I will be explaining but read anyways as it will be short and sweet. cont. Step 3. Once you have a candlestick chart you feel comfortable reading and see a trend, use signals and indicators to back you up. With the F(x) feature you can add any indicator you want and in this tutorial I will be showing the main ones I use. Step 4. When you click on the F(x) it gives you the option to search for indicators, the indicators I use on all my charts are Divergence+ by Market Scriptors (the only one in this tutorial that cost a monthly subscription because it is so accurate) Guth_3x_Confirm by Cguthrie 922 Kurotoga Cloud by D7R MACD by Tradingview Relative stregnth Index by Tradingview Once all these are in place you can start analyzing, and I will discuss what to look at for each one listed in the next tutorial
NASDAQ:NVDAEducation
by Myantman101
6
Divergence in BTCUSDPrice while approaches its resistance level, is forming a divergence with MACD. Price is creating higher highs and MACD is forming lower highs. That means BTCUSD is losing its momentum. On the other hand there are confluence of sell orders in that resistance level. Therefore it probably can't break that level and goes down. But that's not enough for us. we need to catch a strong down move. What if it didn't breaks that level, but create a trading range around that resistance level? We do NOT want that. So we need evidence that shows us the price had reverse its move and is forming a downtrend. That evidence is our TRIGGER. The trigger could be break of a trend line, a candlestick pattern, or anything that shows we're entering a downtrend move. I used breakout of a trend line here. And for take profit, I used an 20 EMA as a trailing stop loss. Thanks for reading. Write your opinion in the comments.
BITSTAMP:BTCUSDEducation
by Trading-with-Ali
2
Some interesting indicators I codedSupport&Resistant indicator :Draw lines when fail to make a higher high or lower low. MACD divergence on chart:Show DIF cannot make a higher high or lower low when candles make a higher high or lower low on the candle chart,not on the MACD chart. Session break:show Asian/London/New York session by different background color and show previous highest/lowest as session support and resistant and draw lines. Range:When fail to make a higher high and lower low that form a range. Please comment ,thanks guys.
Education
by Quant_David
Awesome OscillatorThe Awesome Oscillator (AO) is displayed as a histogram showing the market momentum based on a comparison of the simple moving average (SMA) of the last 5 price bars median to the simple moving average of the last 34 price bars median. MEDIAN PRICE = (HIGH+LOW)/2 AO = SMA(MEDIAN PRICE, 5)-SMA(MEDIAN PRICE, 34) When the momentum of the past 5 bars is weak compared to that of the 34 bar period, the AO displays this shift as a red bar. When the recent 5 bar momentum is stronger, the AO displays the shift as a green bar. The AO displays these shifts by a series of red and green bars. Series of red bars indicate declining bias. Series of green bars indicates rising bias. Related to the AO are Zero Line Cross Over , Twin Peaks Patterns , and Price/Momentum Divergence . When the AO is added to other technical indicators, such as Divergent Bars and Bollinger Bands, traders are able to assess which way a stock is likely to move. The AO can help see what is coming! Zero Line Cross Over When the AO crosses over the zero line, moving from above the zero line to below the zero line, this is a declining bias indicator. A rising bias is indicated when the AO crosses over the zero line, moving from below to above. Twin Peaks The Twin Peaks pattern indicates a declining bias when the AO forms a series of green and red bars where each transition from green to red (a peak) is smaller than the previous peak. A rising bias is indicated when the AO forms a series of green and red bars where each transition from green to red (a peak) is larger than the previous peak. Price/Momentum Divergence Declining Bias - When the AO shows declining momentum and, during the same time period the price of the stock is showing a rising trend (higher highs and higher lows), there is divergence that is forecasting an eventual decline in the price. When momentum weakens, price may still rise for a period however, without momentum the price will snap back because there is not enough buying volume to maintain the upward price momentum. Imagine a rubber band stretched between the two ends of the “V” formed by the two trend lines. In the chart example above, you can see the strong divergence between rising price and declining momentum. The price ended up snapping back in line with the AO and then continued to move lower. Rising Bias - When the AO shows rising momentum and, during the same time period the price of the stock is showing a declining trend (lower lows and lower highs), there is divergence that is forecasting an eventual rise in the price of the stock. When momentum strengthens, price may still decline for a period however, eventually increasing momentum will push the price higher.
SP:SPXEducation
by NewCycleTrading
9
Regular DivergenceRegular Divergence signifies either a correction to the trend or after further confirmation, a complete reversal of the trend. Regular Divergence is identified by comparing price action (PA) to the Relative strength index indicator (RSI). Regular Bearish Divergence (RbD) occurs when price action forms a higher high (HH) but the RSI indicator forms a lower high (LH). RbD is confirmed by the candle close below the previous candle low. BASIC The entry price is taken from the candle close. The stop loss price is taken from the candle high. The target is set at 1-2RR. The trade is closed at the target price. ADVANCED 50% of the position is closed at target. The stop loss price is moved to the entry price. The Long hedge position is the size of the initial short position. The hedge entry price is taken from the candle close. The stop loss price is taken from the previous swing low. The target is set at 1-2RR. 50% of the position is closed at target. The stop loss price is moved to the entry price.
Education
by Cryptsyxalt
MUST SEE - the big picture - Bounce off 20sma or March drop?This chart should be a big part of your big picture! 1 - Look at the Oct-Dec 2018 selloff in the orange rectangle. Note how SPY closed below the 10sma in Oct, retested up in Nov, and dropped to the 20sma in Dec. This is a very common pattern you will find on price action. 2 - See the corresponding orange rectangle in RSI. RSI dipped below 50 and came back over the next month, and the 2019 rebound rally ensued. 3 - Blue rectangle shows a bearish 3-candle pattern, and also you can see that price has come down to the 20sma. The unbelievable waterfall selloff on the daily chart looks like a needed return to normal on the monthly chart. Also note RSI is coming back to 50. 4 - Red lines showing bearish divergence, and note %D stochastic (red line) is just turning down. *** Since divergence has already happened, March could see more selling and SPY comes immediately down through 20sma. Alternatively, March could see a bounce, or retest, upward. If buyers do step in for a March relief rally, SPY should drop lower over the next few months. *** This monthly chart should inform your daily and weekly planning. On these timeframes, there will still be upside and possibly a tug of war between buyers and sellers. On the monthly and weekly, look for the 10sma to cross below 20sma and RSI to go below 50 if we are to enter a recession.
AMEX:SPYEducation
by OptionsRising