Reinsley - Hidden Divergence is a term used to refer to a scenario where an indicator makes new hi/lo that is not confirmed by price action .
Gerard the graphic you sent was quite interesting. The fact of the matter is most times we don't get text book setups. The one you have pointed out is almost as good as it gets. The trick is in the recognizing i.e. being alert to the possibility that a setup might come up in the near term and then having a trade execution strategy that has suitable safeguards built into it.
Regards
Rakesh
On Sun, Dec 21, 2008 at 9:23 PM, reinsley <reinsley@xxxxxxxx> wrote:
Hi,
>>Am I correct in my analysis that this constitutes bearish hidden
divergence, and the probability exists that the downtrend will resume?
I don't know what you mean by "hidden", simply a divergence is :
the price makes a second top higher ( or flat at the same level )
and the momentum's second top is lower ( weak )
A downtrend could appear.
Sometimes there are three tops before the price collapse.
I know no rules concerning volumes. I can't say anything.
BTW, it would be nice to draw automatically such divergence with an
AFL formula...
Best regards
--- In amibroker@xxxxxxxxxxxxxxx, "Gerard Carey" <gcfinance@xxx> wrote:
>
> I'm attempting to sharpen up my `Hidden Divergence' skills.
> The .doc attachment shows a recent period on the S&P500 chart where I
> have attempted to define an instance of `Hidden Divergence'.
> I'd appreciate your comments as to my analysis.
> Also links to sites that have useful explanations.
>
> The .jpeg attachment shows the chart with greater clarity, but without
> my waffle.
>
> Regds, good trading, and Merry Christmas,
> Gerard
>
> --
> http://www.fastmail.fm - Access your email from home and the web
>
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