Divergence Trading Works

[GordonTheGekko]

What about volume weighted average price (VWAP)?

 

[T1P1]

A pattern of divergence between price and order flow based indicators is often present on session extremes.

Today, 10/06, the best trade of the day was a buy on the session low. The session low was perfectly indicated by the positive divergence between price and indicator V94Window as shown in the attached pic.

As more and more of these signals are posted one cannot help but notice both how alike they are and how often they repeat themselves at points of opporutnity.

 

[T1P1]

It is amazing how often these same divergences appear on both local and session extremes.

We find divergences between price and order flow, especially when they are confirmed by more than one time frame, more reliable that divergences between price and price based indicatos such as MACD, RSI and Stochastic.

The attached chart shows the high of trade in ES on 10/07. This extreme occurred one hour before the open of the day session.

 

[T1P1]

While the low of Friday's trade in ES didn't offer the same opportunity as the high, it still marked a great trade and was well indicatoed by divergences between price and order flow as shown in the attached chart.

 

[moonie]

i've noticed you use both 5000 share and 8000 share settings in your charts It would seem to me you should be consistent with your settings if you want to be convincing in your arguments for divergence trading.

 

[T1P1]

The divergences I have shown also show up on other charts.

When there is divergence on a 5k there is almost always that same divergence on the 8k. the problem is I don't know how to attach more than I chart per post.

 

[T1P1]

These divergences/signals work in other markets besides the equity index futures.

Below is a chart from today's, 10/10, high in the Euro/Dollar future which shows a sudden spike in commercial topping activity as well as a divergence between price and order flow.

The point is that not only are these divervgences between price and indicators based on order flow more reliable than divergences between price and price based indicators, they also work in the currency futures and other markets as well.

 

[T1P1]

This negative divergence in a higher time frame in the Euro/Dollar Future confirms that in the faster time frame in the previous post.

These divegences work bettwe as signals when confirmed by more than one time frame.

 

[bmwhendrix]

All I see is false divergences. Just like any oscillator. Everything works sometimes.

 

[brownsfan019]

Quote from bmwhendrix:

All I see is false divergences. Just like any oscillator. Everything works sometimes.

SHHHHHHH

Don't say that, makes it hard to sell indicators for $1400/yr if you point out things like that.

Divergences are awesome and you can have yours for only $1400/yr if you act now! Operators standing by!