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Mikey,
Just a thank you for the articles. They were informative and helpful.
Ron
Mikey wrote:
>
> The "Hidden Divergence" or "Set-up"
> The "set-up" signal (also called "Hidden Divergence") is a very reliable and
> powerful, yet often overlooked signal given by the Stochastic Oscillator as
> well as other price Oscillators such as RSI etc..
> The daily Coffee chart below shows many "Set-ups" or "Hidden divergences".
> The swing higher at point B is much lower than the swing at point A, however
> Stochastics shows a much higher peak at point B than at point A. After the
> low at point C the market rallied and then pulled back to make a higher low
> at point D, the low at D on Stochastics was much lower at point D than it
> was at point A, this is a very good Bull set-up signal (Hidden divergence).
> This type of divergence signal is different than the traditional divergence
> shown at lines "a" and "b" in which the market makes a higher high and
> Stochastics makes a lower high and is somewhat illogical.
> After the market sold off after the "normal divergence" signal as prices
> crossed both 18 and 40 day Moving averages and it appeared that the trend
> may have changed ? however, at point E the prices were higher than at point
> D, but Stochastics were lower at E than they were at D, giving a Bull set-up
> signal. A second set-up signal was given at point G which was higher in
> price than F but Stochastics made a lower low G than F.General assumption is
> that normal divergence appears at tops and bottoms and is generally "against
> the trend"while hidden divergence occurs at entry points that would be
> considered trading "with the trend"Andrew Cardwell (RSI) calls these setups
> "positive & negative reversals" and teaches thatpositive reversals (bullish
> hidden divergence) only occurs in uptrendsand negative reversals (bearish
> hidden divergence) only occur in downtrends.........while I dont agree with
> that 100%, I do think that this form of divergence is the most reliableand
> offers the better trade setups
>
>
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>
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