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Divergence

Mentorship InstaView 16 June’21: Indeed an Evening Star
Nifty View: As expected today’s 100 points sell-off from the benchmark Nifty index has lead to an “Evening Star” pattern on the daily time frame. This three candlestick pattern is bearish and suggests further price weakness. A confirmation of this will come once the price breaks below today’s low of 15,766. Do not get too carried away with this bearishness as the index is still in a strong UP trend and these candlestick patterns are prone to failures. Having said this, keeping in mind the nature of today’s sell-off (especially in the final 30mins), an extension on the downside is very much likely for a test of 15,700 or further down. We will get a much clearer and confirmed picture once today’s low gets compromised. Till then it’ll be prudent to stay cautious (as advised since the past few sessions) and wait for better opportunities. Thank you for following my work and please feel free to share your thoughts and suggestions.         Trade Well. Trade Wise. 
NSE:NIFTY1!
by Abhijit_Paul
1
Nifty InstaView 15 June’21: Evening Star?
Nifty View: Benchmark Nifty opened well in today’s session and that's all that it did. There was a dash of some intraday volatility, but overall the index faired well to hold onto the minor gap up with which it opened in today’s session. On the daily chart, we have a possibility of an “Evening Star” only and only if the index opens below 15,836 and stays below. But that is just anticipation. The facts of price support the underlying UP trend and with momentum one can expect further upsides. Price-momentum divergence persists which has so far not lead to any serious damage, but short term dips. Strategically makes sense to stay cautious with an overall positive bias. Banks, especially Private sector banks need to play an important role if upsides from Nifty has to continue. Thank you for following my work and please feel free to share your thoughts and suggestions.         Trade Well. Trade Wise. 
NSE:NIFTY1!
by Abhijit_Paul
1
Indiabulls Housing Finance - Very AttractiveMarket Cap ₹ 9,520 Cr. Stock P/E 7.41 Vs Industry PE 21.2 ROCE 10.2 % ROE 13.8 % OPM 5Year avg 87.4 % Promoter holding 22.5 % (negative) Pledged percentage 0 % Debt to equity 4.58 Intrinsic Value ₹ 1,173 Best of all is at current price Dividend Yield 15.1 % and it consistently paysout dividend. Technically bullish divergence Spotted. After the breakout of the Triangle , it would ZOOM. Choice is yours about whether you want to accumulate before or after the breakout.
ILong
by CannySunny
Nifty InstaView 14 June’21: Volatile Drama 
Nifty View: Quite a volatile session for the benchmark Nifty in today’s trade as the index oscillated within a day’s range of more than 200 points. The Adani group stocks related news from media and its counter news from the company led to wild swings for its stocks today which lead to some serious damage for derivatives traders. Coming back to Nifty, the index still manages to hold itself in a UP trend but now volatility has spiked up. Not to forget the price-momentum divergence persists and upsides can be capped and may lack high momentum. Time to stay careful and cautious and better to wait out a few sessions for the index to settle down. Today’s low of 15,630 now acts as an important trigger for any serious price correction. Thank you for following my work and please feel free to share your thoughts and suggestions.         Trade Well. Trade Wise. 
NSE:NIFTY1!
by Abhijit_Paul
Nifty InstaView 11 June’21: Exhaustion or Runaway?
Nifty View: Fourth successive positive weekly close for the benchmark Nifty index with today’s up move. All these weeks, the index has shown fine momentum to hit a new life high and also resilience to hold onto itself at this height. Now in today’s session, we had a gap up opening, post which there was minor intraday volatility with no follow-through buying. Thanks to IT and METALS the index managed to hold onto its gains and post a close at 15,817. The possible weakness from the “Rising Wedge” is now negated, but the price-momentum divergence continues. This means that moving ahead upsides are likely to be staggered and are likely to face profit-taking. So strategically let’s continue with a bullish bias and look for short term long opportunities. Thank you for following my work and please feel free to share your thoughts and suggestions.         Trade Well. Trade Wise. 
NSE:NIFTY1!
by Abhijit_Paul
1
Divergence Masterclass 3 - Bearish divergenceIn the last 2 threads, we have already covered the basics of divergence and learnt everything about bullish divergence. If you have missed those threads, please go through the first 2 threads before reading this one. Now let's start with our topic, Bearish divergence, which I'll cover in 3 parts: 1. What is bearish divergence? 2. Types of bearish divergence 3. Subtypes with illustrations What is Bearish divergence? A bearish divergence occurs when the price rises to a new high while the oscillator fails to reach a new high. It indicates that the buying pressure is decreasing and the bears may soon take over the market. Generally, a bearish divergence occurs at the end of an uptrend. Bearish divergence is mainly of 2 types: 1. Classic bearish divergence – In this case, the price and the oscillator always either forms a higher high or an equal high. Considering these cases, the classic divergence consists of 3 subtypes. The classic divergence occurs at the end of a bullish trend and indicates a weakness in the underlying trend. 2. Hidden bearish divergence – In this, the price forms a lower high, but the oscillator forms a higher high. Hidden divergence occurs during the correction phase of a trend and is a possible sign for a trend continuation. So, combining all the above cases, there are only 4 types of Bearish divergence. You don’t have to memorize the names, it’s just a waste of time. Try to understand the underlying logic. 1. Strong Bearish Divergence. The price makes a higher high but the oscillator makes a lower high. This means that the buyers are not buying at the same momentum i.e. the buying pressure is decreasing. Price: Higher High (HH) Oscillator: Lower High (LH) 2. Medium Bearish Divergence The price makes a double top, almost the same level as the previous high and the oscillator makes a lower high. This indicates that at the same price levels, the momentum is decreasing. Price: Equal High (EH) Oscillator: Lower High (LH) 3. Weak Bearish Divergence In a weak bearish divergence, the price makes a higher high but the oscillator has almost the same high levels. This means, even though the price is increasing, the momentum is intact. Price: Higher High (HH) Oscillator: Equal High (EH) 4. Hidden Bearish Divergence The hidden bearish divergence occurs at less frequency as compared to the other types. In this, the price forms a lower high, but the momentum oscillator forms a higher high. This indicates that even at an increased momentum, there is enough selling going on to push the price down. Price: Lower High (LH) Oscillator: Higher High (HH) Pro Tip: 1. For bullish divergence, we only look at the HIGHS because we are finding the top of an uptrend. 2. Don’t memorize the cases. Just understand that if the divergence is occurring at the highs, then the price will reverse in the opposite direction i.e. it will go down. Hence, you just have to spot the divergence, regardless of the name. Conclusion: This completes our 3 thread masterclass on divergence. This an important concept in trading. Even if you don't trade divergence, you should at least know about it to spot the potential change in trend. Keep reading again and again until you master these concepts. All the best! Also, I am linking here all the threads related to this divergence masterclass(Don't know if that is allowed. Mods please remove the links if it isn't allowed, please don't remove the post). I am also thinking of combining all the threads into a single PDF file, but don't know how I'll share it with everyone since external link sharing is not allowed. Let me know if you guys want it. Cheers! 1. Divergence Masterclass 1 - What is Divergence? 2. Divergence Masterclass 2 - Bullish divergence 3. Divergence Masterclass 3 - Bearish divergence
BITSTAMP:BTCUSDEducation
by johntradingwick
17
Divergence Masterclass 2 - Bullish divergenceIn the last thread, we discussed the basics of divergence. In this thread, we are going to learn about the positive divergence a.k.a Bullish divergence. I'll cover it in 3 parts: 1. What is bullish divergence? 2. Types of bullish divergence 3. Subtypes with illustrations So, let's move ahead! What is Bullish divergence? A bullish divergence occurs when prices fall to a new low while the oscillator fails to reach a new low. It indicates that the selling pressure is decreasing and the bulls may soon control the market. Generally, a bullish divergence occurs at the end of a downtrend. Bullish divergence is mainly of 2 types: 1. Classic bullish divergence – In this case, the price and the oscillator always either forms a lower low or an equal low. Considering these cases, the classic divergence consists of 3 subtypes. The classic divergence occurs at the end of a bearish trend and indicates that a trend reversal may occur soon. 2. Hidden bullish divergence – In this, the price forms a higher low, but the oscillator forms a lower low. Hidden divergence occurs during the correction phase of a trend and is a possible sign for a trend continuation. So, combining all the above cases, there are only 4 types of Bullish divergence. You don’t have to memorize the names, it’s just a waste of time. Try to understand the underlying logic. 1. Strong Bullish Divergence. The price makes a lower low but the oscillator makes a higher low. This means that the sellers are not selling at the same momentum i.e. the selling momentum is decreasing. Price: Lower Low(LL) Oscillator: Higher Low(HL) 2. Medium Bullish Divergence The price makes a double bottom, almost the same level as the previous low and the oscillator makes a higher low. This indicates that at the same price levels, the momentum is increasing. Price: Equal Low(EL) Oscillator: Higher Low(HL) 3. Weak Bullish Divergence In a weak bullish divergence, the price makes a lower low but the oscillator has almost the same low levels. This means, even though the price is decreasing, the momentum is intact. Price: Lower Low(LL) Oscillator: Equal Low(EL) 4. Hidden Bullish Divergence The hidden bullish divergence occurs at less frequency as compared to the other types. In this, the price forms a higher low, but the momentum oscillator forms a lower low. This indicates that even at a decreasing momentum, there is enough buying going on to push the price up. Price: Higher Low(HL) Oscillator: Lower Low(LL) Pro Tip: 1. For bullish divergence, we only look at the LOWS . 2. Don’t memorize the cases. Just understand that if the divergence is occurring at the lows, then the price will reverse in the opposite direction i.e. it will go up. Hence, you just have to spot the divergence, regardless of the name. Please leave your feedback, it'll help me to create better content. Cheers!
BITFINEX:ETHUSDEducation
by johntradingwick
87
Divergence Masterclass 1 - What is Divergence? Hello all, today we are going to learn about divergence. A simple topic, which often confuses the newbies. I'll keep this thread short since this will lay the groundwork for the upcoming threads. Please go through this thread before proceeding to the next threads. Foreward In this thread, I would explain the following as easily and briefly as possible: 1. What is divergence? 2. What are the different types of divergence? Introduction When the price of a stock moves in a certain direction, the momentum oscillator should also move in the same direction. Eg. When the Price makes a higher high(HH), the momentum oscillator should also make a higher high(HH). This is called convergence since both, the price and the momentum are converging in the same direction. In a few circumstances, the momentum oscillator and the price do not follow the same path. This is called Divergence. What is Divergence? When the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, it is called divergence. Divergence warns about the underlying weakness in the current trend. The price may or may not reverse at the exact occurrence of the divergence. Different types of Divergence Broadly, divergence can be classified as a positive and negative divergence. The positive divergence is also known as the Bullish divergence, while the negative divergence is called a Bearish divergence. 1. Bullish divergence/Positive divergence Positive divergence signals that the price could start moving higher soon. It is of 2 types: Regular Bullish divergence Hidden Bullish divergence Some illustrations of Bullish divergence: 2. Bearish divergence/Negative divergence Negative divergence signals that the price may soon start falling to lower levels in the future. It is of 2 types: Regular Bearish divergence Hidden Bearish divergence Some illustrations of Bearish divergence: Conclusion: I hope you may have got a better idea about divergence now. I'll post the next thread explaining bullish and bearish divergence separately as I didn't want to clutter this thread. Useful Tips: 1. You should not rely on divergence solely, as it doesn't provide timely trade signals. 2. Divergence can last a long time without a price reversal occurring. 3. It may NOT play out sometimes. Hence, it is just like any other indicator which has a probability of working out but NOT a certainty.
BITSTAMP:BTCUSDEducation
by johntradingwick
5
Example of positive and negative divergence Divergence occurs when the RSI is increasing and the price movement is either flat or decreasing. Conversely, divergence occurs when the RSI is decreasing and price movement is either flat or increasing. A bearish(Negative) divergence occurs when the price makes a higher high and RSI makes a lower high. As in the first case. we can see a significant price fall after that. A bullish(Positive) divergence occurs when price makes lower low or maybe at the same level in some cases and RSI makes a higher low. We can see a price rise after it.
NSE:ASHOKLEYLong
by kumarankit231