fib. expansion and retrace in forex

[athan00]

on the following chart i couldn't also understand where the divergence occurs. leg 1, 2 or 3?

thanks

 

[shopster]

Quote from athan00:

Hi S,
this is a great thread. I ve read up to page 30. Some charts are very clear where the divergence is but on some others it is really a puzzle to find out what happened.
So I ve got some charts where I want to ask a few questions to understand a few stuff.
In the chart that I attach i found a DB on the left (inside the square) with a divergence on the right leg. The price after this DB has dropped. In theory it should go up isn't that correct?
So how do we handle these wrong divergence? We just wait to hit the SL?

Above I say that price should go long because wherever I ve read about divergence I got the same two type of divergence in conclusion:
Type 1. When price goes like \ and the indicator goes like / then go long
Type 2. When price goes like / and the indicator goes like \ then short.

...............................................

A,

you are sitting on the solid yellow money line.
in a tight band range.

price trades "away from this line" and then comes back.
over and over.

there is a short trade in the top right corner at the outside fib band in green diverged on the histo.
back to the money line.

my long trade is a "slingshot massive diverged" long setup after a full pull down to the bottom.

fib out the area you have marked on the chart south.
this gets you to 5.7 at the bottom center.

the zero lag histo bars do not even turn down on the second leg
this is called "cork under water........."

this is called a " slingshot db fully corked" trade.

cheers,

s

 

[shopster]

Quote from athan00:

on the following chart i couldn't also understand where the divergence occurs. leg 1, 2 or 3?

thanks

it is a triple bottom.
all 3 legs are diverged from the last leg down to the left of the setup.

a triple cork ready to pop up.........

the last leg down is the lowest by a few ticks

this is where all the pending orders sit for the short breakout guys who think it is going lower........

after the third trip down to get 'em all short, they yank it back up and " pin the shorts........."

this is called the " clean and jerk........."

95% of all retail uses a 10 to 25 tick stop loss

pull the market up and blow them all out .

also ......
a slingshot back to the moneyline for the first leg.

s

 

[athan00]

S,
thanks for your answer and time. This is really educating.

Please if you could just make clear on my head something about divergence that i keep finding in your chart.

First when there is divergence we mean that if price is moving up and indicator is going down we go short or if price is moving down and indicator is going up we go long. Correct? At least this is what I ve read around so far in tutorials. Are there any other cases?

Now in many of your charts I keep finding price going up and indicator going up as well or price going down and indicator going down as well and you mark this as divergence. I many be totally wrong so that is why I m asking.
I attach one of your charts that are like this. Please check trade B where is clear that on the DB both price (on the 2nd leg) is going up and indicator as well.

And another question I ve got on this chart is, when you actually enter the trade? Cause when the histo bar touches the zero line the price is almost already in 162 fib level (red line).

Thanks

 

[shopster]

trade a

the first leg has weak positive histo bars pointing up.
the second leg has the histo bars already " under zero......"
massive diverge
there is no second hump
therefore no strength

............cork under water


short at .62 .76 or .86 or a dt retrace on the second leg.
the histo must continue to get longer bars going south.

the histo bar tips must also pierce the orange ma line to show weakness on price as it moves lower.

when they retract back , the move may be over........
check the bottom of the chart red box.

..................................

trade b

classic setup

first histo hump lower
second hump higher or shorter bars
histo bars retracted back under the orange ma line
.76 retrace on the second leg.

as the histo crosses the zero line, the bars need to pierce thru the orange ma line on the positive side
they do .

enter wherever you are comfortable on the second leg.

you need to see trend......
however you define it.

.......................................

also read further into the thread about a " one legger fib retrace " setup.

price does not always reach a db or dt.

cheers,

s

 

[shopster]

learn to see the trade without techs. on the chart

slingshot back to the money.

s

 

[shopster]

and again.

 

[shopster]

one more.......

 

[athan00]

S,
thanks for your answer. It really helps since every post of yours is a lesson that someone needs to study it and not just read it.

I think I should re read the whole thread from the beginning and keep more notes this time.

You haven't answered me the divergence part. What I ve understood you re doing and please tell me if i m wrong on that is that you just pay attention only on the macd divergence. So if price makes a DT and macd is moving down then you assume price will drop no matter if price isn't a perfect DT or even if the 2nd leg is lower than the 1st. Same thoughts about DB. Please let me know if I m on the correct path on that.

Thanks

Athan

 

[athan00]

Quote from shopster:

learn to see the trade without techs. on the chart

slingshot back to the money.

s

Yes its very clear that price will always return back to the money line after a DT/DB. Does this work every time?
Is it possible to find out divergence as well without the help of an indicator?