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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Ron
Cernokus
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Friday, June 14, 2002 7:21 PM
Subject: [RT] Re: hidden divergence
Mikey,Just a thank you for the articles. They
were informative and helpful.RonMikey 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> > > To unsubscribe from this group, send an
email to:> realtraders-unsubscribe@xxxxxxxxxxxxxxx> >
> > Your use of Yahoo! Groups is subject to <A
href="http://docs.yahoo.com/info/terms/";>http://docs.yahoo.com/info/terms/>
>
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