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Alex,
Some of the more hardcore Metastock TA sites have developed
divergence explorations using various methods. Some work well and
some do not. Divergence is nothing more than a weakening of momentum.
During this time price will continue to rise while the momentum
indicator will show successively lower highs. It can be a leading
indicator of trend change. According to Thom Hartle though in a
recent Active Trader magazine article, "Experienced traders know the
RSI will repeatedly diverge from price during sustained uptrends or
downtrends before eventually making the final top or
bottom...essentually giving one false reversal signal after another."
If you are going to use a divergence indicator you must know when you
are simply loosing momentum and when reversal momentum has gained
enough to signify a trend change. Options traders can use divergence
to their advantage, if they are aware of these momentum
differences.
Just to give you an idea of how others were determining divergence,
most were using peak/trough, HHV/LLV, and correlation.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, Alex Tan <bt_alex_tty@xxxx>
wrote:
> Folks,
>
> Can we search via stock exploration for divergence in
> MACD Histogram, Stochastic or Stoch momentum index or
> Force Index in Metastock's explorer?
>
> I have not seen any formulas on the website for these
> kind of explorations. Has anyone seen this or have
> used it before?
>
> Alex
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