Translated from Russian by Google Translate
2 Сентябрь 2009

Exploring divergence. Part 2

In a previous article «Exploring divergence. Part 1» we reviewed the basic concept of divergence and some needed for better assimilation of the material variety of divergence. Today we continue to talk about divergence.


When trading, when the divergence is one of the most important elements that signal the need to enter the market, or withdraw from it, a restore point, and a breakthrough may be reliable signals. Below, we provide a regular schedule. Pay attention. We have the schedule with a view so that you can understand what kind of recovery can lead to the continuation of a trend, and, consequently, to the ability to trade on its development. There is another important nuance - corresponds to the length of the trend line drawn on the price chart, and held on the graph indicator. First of all, in this case, a guide for us will serve as evidence of the indicator MACD. Particular attention is paid to move the line indicator on the mark 0. Therefore, the entrance to the market must rely on the movement of the MACD indicator line on the ground. Fig. 1 shows the divergence of the two.

Divergence marked in red. Note that in the second case, the restoration of the flag has a very high probability of continuation of motion in a given direction. And so it happened. Red Line - EMA200, blue - EMA50. Used two oscillator - Stochastic and MACD. Stochastic has periods of 9-3-3. For MACD-Histogram are given options 7-10-5. Another feature, which we wish to draw attention - this corresponds to the length of the trend line on the chart price and the chart indicators.

divergence

Figure 1

Another case where you can try to find a divergence - this is in those periods, the end of a period of consolidation. At such moments have the opportunity to analyze the market. If the divergence will be present on the charts, it must reveal itself. Good points for this - times when the ends consolidation, or sideways trend. When such moments come to an end, the price will certainly test the previous highs or lows. Such testing is within the range of fluctuations in the price range.

The graph below (Figure 2) shows that sometimes very effectively carry out the trend line for two points, as these terms appear on the chart. In some cases, as, for example, in Figure 2, it is advisable to draw the line, once formed two nearby points. These points are marked by two red arrows. When the price touches the trendline, then in such moments should be analyzed for the presence of hidden graphic divergence.

Separately, a look at the areas highlighted in the circle. Here we have represented a situation where the price once again testing the trend line. In this case, correct the divergence of a warning signal that a signal which is fed hidden divergence, in that case, if he would be taken into account, will not come until the last price minimum.

divergence Forex

Figure 2

The last graph (Figure 3), which we consider, well shows how to use the co-divergence, and trend lines. In this case, the divergence will say that the prices will be strong enough to pass the trend line. A separate note on a fragment which can be stated separately. Here the situation is presented in a longer time interval. Reduce the risk in this case it would be possible if we go on the schedule with a shorter time interval. So it would be much easier to find the exact point of entry into the market. The graph shows that the divergence showed that there are two similar units for long positions. In this case, would be a small risk if the trend line would be broken. These points are marked with blue lines. They coincide with moments when the MACD indicator crossing the mark 0. On this graph shows how many hidden and regular divergences. All of them are marked. The most reliable transactions are transactions that are combined with lines of support, resistance, trend lines and chart patterns.

example divergence

Fig. 3