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Hi J.
Check for new highs and new lows in both the indicator and the price. E.g. I look
for new 5 day highs in both for short term analysis. If I get one in the price
but not the indicator, I generally use OBV, then it "suggests" divergence. I
don't have metastock at work but I think the equation for a new 5 day high would
be h>ref(hhv(h,5),-1). If there is one this equation equals 1. Divergences may
be occuring when the following equations equal 1.
Bearish
(h>ref(hhv(h,5),-1))-(obv()>ref(obv(),5),-1))
Bullish
(l<ref(llv(l,5),-1))-(obv()>ref(obv(),5),-1))
There are many variations on this theme and I hope this helps.
Regards
Steve
J LEWIN wrote:
> Hi,
>
> Does anyone know of a formula that will tell you if a market has diverged
> against an indicator. I'm typically refering to Stochastics/RSI divergances
> and other typical indicators.
>
> Essentially what I'm after is something that mechanises the divergance when
> adding trendlines to a chart. I know one can do it for a specific period ie 10
> days but most divergances occur over the course of varying time scales.
>
> Any help would be greatly appreciated. I'll swap some ideas if you really
> want!
>
> Regards,
>
> Bruce.
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