From my perspective, divergence is just another indicator, flag, that is saying maybe you should look here and watch what is happening.
I would be looking for others flags (based on my method), that are starting to say "a change is in the air". I use candles, so I would be looking for candle patterns that are saying the same thing. MAs are another good indicator. Price cross-over. Are they flattening, crossing? Pick your poison and use sound money management so if you are wrong, you have an account saving exit in place.
My preference is also to use longer time periods as the prevailing direction for shorter time periods. As such, a divergence on a 1min, 5min or 15min chart would only be influencing their time periods. A divergence on a 4hr, daily, weekly, etc, would have more impact on the shorter time frames. Read the longers for over all trend direction and trade only that direction on the shorter time frames. (My style, for what it is worth).
Success is defined as when preparation meets opportunity.
D
EGO Sum Qua EGO Sum
Sempre Avanti
He Who Sits In A Well To Look At The Sky Can See But Little
--- On Fri, 3/5/10, Dhiraj Vyas <dv8256@xxxxxxxxx> wrote:
From: Dhiraj Vyas <dv8256@xxxxxxxxx>
Subject: [EquisMetaStock Group] divergence [1 Attachment]
To: equismetastock@xxxxxxxxxxxxxxx
Date: Friday, March 5, 2010, 10:01 PM
divergence seems to b a tricky subject -although most people use it to identify strength/weakness of the on going trend--i heard webinar of top technician from elliot who says that divergence is used by him for more than a decade--attached herewith two snap shots of index -as analysed by elliot technician--
point to ponder----which time frame is important for trading divergence-- -in the attached weekly chart one can see the divergence of RSX whereas in the daily chart RSX does not give divergence --
weekly divergence is seen for quite some time and still no sign of weakness in the price chart-
should one trade divergence on 5 min-15 min-30 min -hourly-two hourly chart -weekly chart and what could be the result ?---- i have used divergence on daily chart and result so far is extremely good -
any body has experience of other time frames ?
thanks
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