FX4Newbies
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Hi The_mogn,
Keep in mind every point on the chart is defined by price and time. Divergence helps with the "when". If trying to predict divergence turns, you need to have a very sharp system to help you to identify the price where price is likely to turn. Just like a plane doesn't usually take off from anywhere on the runway, but taxis to a specific spot. Price tends to do something similar.
Keep in mind every point on the chart is defined by price and time. Divergence helps with the "when". If trying to predict divergence turns, you need to have a very sharp system to help you to identify the price where price is likely to turn. Just like a plane doesn't usually take off from anywhere on the runway, but taxis to a specific spot. Price tends to do something similar.
FxSuperb
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Hey buddy, there are plenty of indicators that automatically draw divergences. You can find divergences on Stochastic, RSI, CCI, or whatever you prefer. I've tested all of them, and there are plenty of problems. They often draw very small divergences that are irrelevant. As you probably know, no matter what kind of entry signal you use, it needs to be clear—and these signals are not.
Long story short, you’ll get plenty of divergences on your chart, and you won’t understand which ones are good or not. Sooner or later, you’ll find yourself in a bad situation.
I’ve found that searching for them manually works best. One more piece of advice: if you’re, let’s say, trading on the H1 timeframe using support and resistance, you need to scale down to the M5 timeframe when the price reaches support and you expect it to go up. Then, try to find divergences there as additional confirmation.
Entering based solely on divergences will make you fail, just like any other single method. You need to combine them with something you’re familiar with. I hope this helps.
If you want, I can send you divergence indicators for MT4, but honestly, you can find them online. Trust me, you’ll fail using them—it’s a waste of time.
Long story short, you’ll get plenty of divergences on your chart, and you won’t understand which ones are good or not. Sooner or later, you’ll find yourself in a bad situation.
I’ve found that searching for them manually works best. One more piece of advice: if you’re, let’s say, trading on the H1 timeframe using support and resistance, you need to scale down to the M5 timeframe when the price reaches support and you expect it to go up. Then, try to find divergences there as additional confirmation.
Entering based solely on divergences will make you fail, just like any other single method. You need to combine them with something you’re familiar with. I hope this helps.
If you want, I can send you divergence indicators for MT4, but honestly, you can find them online. Trust me, you’ll fail using them—it’s a waste of time.
FX4Newbies
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Hi FxSuperb,
I hear you... Most of the indicators that draw divergences go through a painting-repainting process as price moves along. That's one reason they can be very difficult to trade with and can cause many problems. Agreed.
Yes...best to look for them yourself, and hopefully the trader's method will connect them to the price level, as well as the turn (in time) shown by the divergence. Hunting for divergences alone to initiate a trade will be devastating, as they do not necessarily indicate a change in trend, but just a point in time when price could reverse, and that could mean a retracement (pullback or throwback) or a reversal all together. The trader's system must be sharp enough, and the trader skilled enough to determine which is which.
Like your reply. Absolutely on point!!
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Good question! Predicting divergences beforehand can be tricky since it depends on the relationship between the oscillator and the price at the time. I have seen some traders combine RSI or ROC indicators with volume or trend analysis to spot potential divergences. I don’t think oscillators diverge since most of them are designed to show price momentum. What is your take?
FX4Newbies
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I read the question that was asked by the starter of this thread, but personally, I try to avoid using the word "predict" when it comes to trading, seeing that it is based on probabilities. Divergences can be anticipated if you are watching the chart in question while the divergence is forming, which means you need to work on "knowing" when and at what price levels to look. Sometimes, you can actually see it coming and the next candle is what finishes it off... That's the closest I think one can come to spotting them in advance.
FX4Newbies
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Hi ChelseaR,
Oscillators like RSI can show divergence between itself and price. That info can be very handy when trying to determine when price may turn, but should not be used alone, as you would also find divergences beginning a retracement, which is why many traders who are looking for divergences alone get stopped out. Divergences NEED TO BE qualified in the light of the overall price action.
FX4Newbies
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Completely agree! And Newbies don't get that, because they are looking for the fast and simple way to get into a trade to make their fortunes. Some actually come with a gambler's/ lotto ticket mindset. Trading is NOT that, and the sooner they get it the better off they will be.
You’re right! Thanks for this.
FX4Newbies
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Most welcome ChelseaR. All tools and methods have their limitations. Choose the ones that give the most consistent and reliable information to assist you in making your trading decision.
FX4Newbies
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Dato896
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It does not. It shows trend continuation type divergences with Trend Filter included.
FX4Newbies
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Ok. Great! Might take a look. Thanks.
Dato896
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I sent you link in PM
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