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Divergence

divergence set up - some basic learningwhat is Divergence ? 👇 Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction what is Oscillator ? 👇 An oscillator is a technical analysis tool that constructs high and low bands between two extreme values, and then builds a trend indicator that fluctuates within these bounds. Traders use the trend indicator to discover short-term overbought or oversold conditions. how is Oscillator used in Trading ? 👇 Oscillators are chart indicators that can assist a trader in determining overbought or oversold conditions in ranging (non-trending) markets. Most traders use multiple oscillators to confirm range extremes and for determining the important entry and exit points. 🛑Indicators for spotting the divergence indicator patterns are the Awesome Oscillator, macd, the RSI, CCI or stochastic.🛑 disclaimer - personal view (can be wrong)
Education
by sankhyainvestments
13
Price-Volume DivergenceMy take on price and volume divergence. Ideally, the price should move higher with an increase in volume, which shows that more buyers are pushing the price higher and this is a perfect scenario for the price to continuously rise higher. But, when the price continues moving higher while volume is drying, it shows that buyers aren't interested to push the prices higher. This scenario makes it easier for sellers to step in and increase the supply to drag the prices lower. Such analysis should be supported by price analysis to improve the probability. Also, the news would be a great catalyst. Currently, EURUSD has rallied continuously for quite long and a correction might take place. This post is for educational purposes. If you have any query, comment below and I will respond to it. Also, if you liked my analysis then simply click the like button Thank you and grateful for every one of you! Wishing everyone a happy new year as well as a profitable trading year!
Education
by inteliigentrader
Sunday quiz : Divergence QUIZIs this a bearish divergence or a hidden bullish divergence? Please leave your response with a valid reason. I wont be answering this question as I want you to do your research and find the answer for yourself and in the process of finding the answer I am sure you will get to learn a lot about divergence. I have seen a lot of posts and personal messages on TradingView claiming one or the other form of divergence to fit their pre-conceived bias/analysis without any basic understanding of the concept of divergence. I would request you to form an opinion based on what the chart says and not find (misleading) evidence or signals to fit your opinion.
BITSTAMP:BTCUSDEducation
by k314
3
Nifty: Do I Rely Upon Indicators?For me, an indicator is a tool that provides me a message how the market 'may' behave in future. Which not at all means that the market 'will' behave as has been indicated. Almost all successful traders will agree with me if I say that there are no 'Red' and 'Green' signals in the market. For example in the current market scenario, the index has been drifting down in an oversold environment. Oversold here means that most of the popular indicators like RSI, Stochastic etc. have been signalling that the market is deeply oversold and there 'should be' a bounce-back/pullback. Also trust me when I say that the market may wriggle its way down to nearing supports when the indicators are not just signalling 'oversold' conditions but also showing 'divergence'. You can see the Price-RSI behavior mismatch as the market has been making new lows but the RSI is making higher lows. The markets can do this multiple times for weeks and even for months in some cases. So the indicators are telling me only that bears are getting weaker. But there is no sign of strength on the upside as of now. So what to expect in the coming days? Well !! the picture would be more clear after Monday opening. As of now I can say that it should take some support from 9950-10050 zone as its an important structure support. I can't say as of now if it would be the end of bear phase or not. But in case of pullback it should try to atleast retest the trendline which was broken decisively last week. As per my previous analysis on the index, my instincts have been indicating further weakness after brief pullbacks in the coming days. Below 9950 we have no important support before 9700, and that's 250 points which is a substantial cut and should be kept under notice. Previous post: Hope this analysis would help some traders in making better decisions. Regards
NSE:NIFTYEducation
by Bravetotrade
2
BAJFINANCE : ANALYSIS FOR 3rd July to 5th JulyVerdict: 1) PRICE_ACTION: DIVERGENCE indicating CONTINUATION OF UPTREND, and price-action is also following (BLUE) TrendLine 2) DELIVERY : Reduced from 5.07 lac to 2.88 lac. 3) OI : Increasing from 3 days (July Series) with 2.47 lac contracts added on Friday vs 67.5k contracts added on Monday (today) 4) Options : Highest number of contracts added (20.5k) @ 2350 CE (Call writer expecting that price will not cross 2350 level, which is in line with my analysis. Price is expected to reverse from 2330) ----------------------------------------------------------------- Analysis shows BUYERS & SELLERS have shown least interest today (Monday) hence doji like pattern. Expected to open above 2300+ ----------------------------------------------------------------- Expected to move UP tomorrow (Tuesday). Next target will be 2330. (Keep an eye on OI change on nseindia.com before entering into any trade, for price to sustain upward move OI should increase)
NSE:BAJFINANCEEducation
by akc_trading
Nifty: A Simple Strategy Yielding Lacs.I am surprised to see how this simple strategy could yield such handsome return in the Index futures. Time Period= 1 June till date Chart= 15 min. Rules: 1. Divergence on Stochastics associated with inverse price movement 2. Entry @ break above/below immediately preceding "minor" swing high/low 3. Stop @ below/above immediately preceding "significant" swing low/high 4. Target @ immediately preceding "significant" swing high/low point 5. Would not trigger entry on gap openings, wait for price to pull back to entry or else trade will be missed 6. After entry, if target missed by few points then close position on break of a succeeding minor swing or consolidation pattern, whichever hits earlier 7. Minimum Risk to Reward Ratio should be 1:1 or else trade will be missed. 8. No support or resistance from higher time frame taken into account 9. All the entries taken with Stop loss and Limit orders. 10. Carry forward as long as target or stop is not hit. Trades: Trade1=33 pts. Trade2=16* Trade3=31 Trade4=34 Trade5=32 Trade6=13* Trade7=47 Trade8=37 Total= 243 Profit on single lot= 243*75=18225 For earning 1 Lac or more one should have traded at least 6 lots. * In Trade 2 and 6 target was missed by a few points so as per rules the position is closed at the break of succeeding consolidations pattern. #Trade missed @ Divergence 3 because of poor RRR Although this strategy yielded 100% success with no Stops hit yet it should be noted that we totally missed the shorting opportunity from 9700 to 9565 on 22nd June. The strategy might be successful in sideways to moderately bearish/bullish environment. Will it be good in a trending market is still a question mark for me, perhaps we will get the answer in coming days. Kindly cooperate if am wrong in my calculations somewhere but i suppose the purpose of this post is clear to everybody. Trade safe, stay healthy. Best Regards Afraidtotrade
NSE:NIFTYEducation
by Bravetotrade
35
Stochastic: Oscillate the Right Way – A study of SBIDeveloped by George Lane in 1950 – Stochastic (SO) is a momentum oscillator, that is, it follows the momentum of price. Its value oscillates between 0 to 100. The general interpretation of SO is that stock is overbought when SO value is above 80 and oversold below 20. But to what extent this interpretation is correct? Let’s find out. I am taking State Bank's weekly chart (random pick) 2013 onwards. Although the study is applicable to all time frames yet it is more reliable on larger timeframes. The smaller timeframes can always be used for better entries and exits. I am taking only %D line which is 3 period MA of %K (not showing here on SO chart) which represents the current value of SO. The reason for choosing %D is that it is smooth and less noisy. A cross of %K over %D is used as buy and sell signals. But a lot of false signals are generated through this system as it noisy in case of volatile stocks, so I am ignoring this system in this study. Overbought Zones and Rallies Let’s first concentrate on points where SO cross above 80 Point C: Stock rallied 57% Point E: Stock rallied 20% Point I: Stock rallied 29% Point K: Stock rallied 7% Oversold Zones and Falls Now concentrate on points where SO value crossed below 20 Point a: Stock fell -25% Point c: Stock fell -9% Points e,f: Stock almost flat Point g: Stock fell -11% Point h: Stock fell -33% So is it a good practice to sell a stock because SO is above 80? Absolutely not, rather when SO value crosses 80 a buy should be triggered because stock is in bullish momentum. Same is true for SO cross below 20, it generates sell signal. Divergence and Price oscillation: Another Interpretation Another interpretation of SO is through Divergence. Means when price is making higher peaks but SO is making lower peaks or stock making lower troughs and SO making higher troughs. Between points b and d: huge divergence on SO, Price flat at D1; rally 93% At F: Divergence with rising price (D2); initial fall 23%, total fall 55% At i: Divergence with price fall (D3); rally 80% At J: Divergence(red line) with price rise (D4), fall 16% but SO didn’t touch 20 this time, while it did in above 3 cases At L: Divergence(red line) with price rise (D5); Fall so far 10% So will it be right to trust divergence? Absolutely, as it is followed by massive price movement. But will be right to trust only divergence for buy or sell? Absolutely not, it should always be used in conjunction with other price action signals. And now the big question, what is the present scenario in this chart? Look at the divergence on SO (thick yellow line) and the price movement of the stock and interpret yourself. Play safe, stay healthy and like if u can.
NSE:SBINEducation
by Bravetotrade
10