Quote:
Originally Posted by costard
Thanks for the insight Irathi. A dramatic example. I know divergence can be a powerful and leading indicator. I didn't see it, so thank you for pointing it out. But if I had I still wouldn't be inclined to take the trade. The failure of the trade indicated on May 13th with similar divergence would make me wary.
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I do see the divergence on the 13th May. This maynot be the correct thread to talk divergence, but I hope others will not be angry. When the first divergence occured, the weekly stoch lines (both) had not crossed 20 line(OS). Other indicators indicated to me the pair was still in a downtrend.
The divergence trader looks for these 3 wave divergence as a higher probability trade versus a simple divergence.
One may like to look for Price Action (HH,HL) before entering after a 3 wave divergence. Usually this seen on daily... check weekly and see if there is indication of weekly trend reversal....
Another post -entry today(5 days later) see where the price turned(on Monthly Pivot). See if weekly is showing more reversal.(A ashfxv2 arrow is starting to show. Of course need to wait for friday for the candle to finish.
Daily stoch still in the 20/80 range looking north.
In Summary:
3 wave Divergence is a very, very high probability trade. Use as Alert... Confirm by price action HH and HL to enter. Always check Weekly charts. Always draw trendlines...look for breaks to TL.
