Divergence line on Awesome Oscillator :

[Mehrdad Shiri]

hi;

Divergence line on Awesome Oscillator is acceptable: were going through histogramm body OR not?, must have Opposite slope versus Price trend line  OR  must have Increase/Decrease in slope versus  Price trend line ?

i work on an indicator to determinate the Divergence on Awesome Oscillator. ( Regular Divergence & Hidden Divergence )

based on : https://www.mql5.com/en/docs/standardlibrary/expertclasses/csignal/signal_ao

Divergence — the first analyzed bottom of the indicator is shallower than the previous one, and the corresponding price valley is deeper than the previous one. In addition, the indicator must not rise above the zero level. ( below pic.)

i wrote this ( not complete yet , must add alarm , arrow, send mail, alert, ....). there are all of Divergence type.

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my qustion's are :

a) case 1 : "  it is not Important lines going across through the indicators/histogram body " . as abow picture.

a) case 2 : "  lines must be not going across through the indicators/histogram body " .

     in this case , so, i must delete that line are going across through the indicators/histogram body by compare with lines equation's & value of Awesome Oscillator.

    for example :

        

 or  

             

  or

     

or

    

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b) case 1 : " must have Increase/Decrease in slope versus  Price trend line  " . as it is. by using:

               if(Ext_AO_Buffer[bar]<Ext_AO_Buffer[ALL_LastPeak_bar[l]] && 
                 Low[bar]>Low[ALL_LastPeak_bar[l]])
                {
                 DrawIndicatorTrendLine(bar,Time[bar],Time[ALL_LastPeak_bar[l]],
                       Ext_AO_Buffer[bar],Ext_AO_Buffer[ALL_LastPeak_bar[l]],Red,STYLE_SOLID);
                 DrawPriceTrendLine(bar,Time[bar],Time[ALL_LastPeak_bar[l]],
                       High[bar],High[ALL_LastPeak_bar[l]],Red,STYLE_SOLID);                 
                }
               if(Ext_AO_Buffer[bar]>Ext_AO_Buffer[ALL_LastPeak_bar[l]] && 
                  Low[bar]<Low[ALL_LastPeak_bar[l]])
                 {
                 DrawIndicatorTrendLine(bar,Time[bar],Time[ALL_LastPeak_bar[l]],
                       Ext_AO_Buffer[bar],Ext_AO_Buffer[ALL_LastPeak_bar[l]],Orange,STYLE_DOT);
                 DrawPriceTrendLine(bar,Time[bar],Time[ALL_LastPeak_bar[l]],
                       High[bar],High[ALL_LastPeak_bar[l]],Orange,STYLE_DOT);                 
                }

b) case 2 : "  lines must have Opposite slope versus Price trend line " .

like:

for example:

    

or

   

in this case , so, i must just keep that line's  are have Opposite slope versus Price trend line compare with lines equation's  ( + or - vs. - or + ).

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can you please tell about :

   a) case 1 : "  it is not Important lines going across through the indicators/histogram body " .

   a) case 2 : "  lines must be not going across through the indicators/histogram body " .

   b) case 1 : " must have Increase/Decrease in slope versus  Price trend line  " .

   b) case 2 : "  lines must have Opposite slope versus Price trend line "

thank you.

[Sergey Golubev]

I am not professional with divergence but according to my opinion - yes, you are right -it will be must more easy for us if this divergence line will not go through histogramm body. Because as I understand - it was oscillator originally.

If I am wrong so sorry.

Just an example :

Forum

Indicators: Relative Strength Index (RSI)

newdigital, 2013.08.07 14:41

RSI Hidden Bullish and Bearish Divergence Trading Setups

Hidden divergence is used as a possible sign for a trend continuation. Hidden divergence occurs when price retraces to retest a previous high or low.

Hidden RSI Bullish Divergence

Forms when price is making a higher low (HL), but the oscillator is showing a lower low (LL).

Hidden bullish divergence occurs when there is a retracement in an uptrend.

This setup confirms that a retracement move is complete. This divergence indicates underlying strength of an uptrend.

Hidden RSI Bearish Divergence

Forms when price is making a lower high (LH), but the oscillator is showing a higher high (HH).

Hidden bearish divergence occurs when there is a retracement in a downtrend.

This setup confirms that a retracement move is complete. This divergence indicates underlying strength of a downtrend.

and this one :

Forum

Indicators: MACD

newdigital, 2013.08.01 17:00

MACD Hidden Bullish and Bearish Divergence

MACD Hidden divergence is used as a possible sign for a trend continuation. 

This setup occurs when price retraces to retest a previous high or low.

1. Hidden Bullish Divergence

2. Hidden Bearish Divergence

Hidden Bullish Divergence

Forms when price is making a higher low (HL), but the MACD oscillator is showing a lower low (LL). 

Hidden bullish divergence occurs when there is a retracement in an uptrend.

MACD bullish divergence

This divergence confirms that a retracement move is complete. This divergence indicates underlying strength of an uptrend.

Hidden Bearish Divergence

Forms when price is making a lower high (LH), but the MACD oscillator is showing a higher high (HH). 

Hidden bearish divergence occurs when there is a retracement in an uptrend.

MACD bearish divergence

This setup confirms that a retracement move is complete. This diverging indicates underlying strength of a downtrend.

NB: Hidden divergence is the best divergence to trade because it gives a signal that is in the same direction with the trend. It provides for the best possible entry and is more accurate than the classic type of diverging.

But may be I am wrong as I am not  a very professional with divergence - I am just learning it sorry.

[Mehrdad Shiri]

newdigital:

I am not professional with divergence but according to my opinion - yes, you are right -it will be must more easy for us if this divergence line will not go through histogramm body. Because as I understand - it was oscillator originally.

But may be I am wrong as I am not  a very professional with divergence - I am just learning it sorry.

thank you.

this is Modesty from you. thank you.

thank you.

[Sergey Golubev]

I used to trade divergence on real account for some months ... it was long time ago and with MT4 sorry. The only problem I had - was the following: where to exit. Because the price can move to 100 pips, or 50 pips, or to few pips.

[Tonny Obare]

I also dont have much experience with this but from my past experiments with trend lines i happen to think allowing the trend lines to cut the candles a little might improve performance compared to having the lines to only touch the tips of the candles. But then again it was just a quick observation on my side but didn't quite do extensive experiments on it. I don't even know if the same might apply in the case you have here.

[Rob Cain]

Some well explained charts Tim, well done, divergence is one of many trading forms, sometimes a chart has the signes of divergence but holding your nerve is the key at times, depending on time frame you may have a trade move against you, at what point would you close.

I suppose the time frame has to be taken into account with what your risk would be, all in all an excellent graphical breakdown of "divergence"

Rob 

[Mehrdad Shiri]

tonny
rob

thank you both ,

to clear it , i must decide about 2 case ;  if there is some thing about this ,

or any one else can talk about :

============================================

   a) case 1 : "  it is not Important lines going across through the indicators/histogram body " .

   a) case 2 : "  lines must be not going across through the indicators/histogram body " .

   b) case 1 : " must have Increase/Decrease in slope versus  Price trend line  " .

   b) case 2 : "  lines must have Opposite slope versus Price trend line "

thank you.

[Mehrdad Shiri]

thank to all commented here or send PM to me.

so, i will do such as can active or not :

   Indicator lines must going across through the indicators/histogram body ?    yes/no.
   Indicator lines must have Opposite slope versus Price trend line  ?    yes/no.