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Can someone share his opinion on divergence?

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EDWINGENTNER
20
EDWINGENTNER  
Can someone share his opinion on divergence? And also what about  hidden divergence? Which one indicator is the best?
Pete
228
Pete  
EDWINGENTNER:
Can someone share his opinion on divergence? And also what about  hidden divergence? Which one indicator is the best?

In my opinion, RSI is the one.  I studied with Andrew Cardwell - what he doesn't know about RSI could be written on the back of a postage stamp  :-)  I would strongly advise you to google him and look at everything you can find.  He calls hidden divergence positive and negative reversals - very, very powerful.

If you need any more help, PM me.  Good luck.

Rob Cain
736
Rob Cain  

Put simply, the market (eg. forex market) moves in waves, hi, lo, higher high, lower low, so attaching an indicator like RSI,MACD, you will observe these indicators making "waves" that follow the market waves,(simple terms of course)

Divergence occurs when a wave in the market is not represented on the indicator, eg, the price hits an intra-day high and the indicator follows, (point A) the price falls back then rises to hit the same high, or higher (point B) but the indicator is lower (point B) than the previous time, it hit the same high,(point A),

The opposite is true, low in the market and indicator, then another low or lower but the indicator clearly fails to go lower than previous,(easier explained with an intra day high example) 
 

Hope this helps, look at a chart with the MACD indicator under the chart, hourly may be clearer and look for what has been explained, it will make more sense, hidden divergence is a bit above me, probably to many on here too as there is a lack of answers, PM if you need more help.

EDIT

Both RSI and MACD are easy to read divergence, use both to get an understanding then preference may prevail, no law saying you cannot use both. 

EDWINGENTNER
20
EDWINGENTNER  
Pete:

In my opinion, RSI is the one.  I studied with Andrew Cardwell - what he doesn't know about RSI could be written on the back of a postage stamp  :-)  I would strongly advise you to google him and look at everything you can find.  He calls hidden divergence positive and negative reversals - very, very powerful.

If you need any more help, PM me.  Good luck.

Thanks!

Rob Cain
736
Rob Cain  

I must have been talking a load of crap Ed, thanks.

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