Which one carries more weight?

[Arni]

Hi everyone
I’m new here,my name is Arni
have a question, which divergence carries more weight, exaggerated, regular, or hidden? or they’re all the same but become more forceful as they print on major S/R areas/zones?
Could you have foreseen that green candle with the question mark? it printed on the 1h TF when momentum on 4h was negative
Where would you have entered a short trade?

 

[SunTrader]

Look at RSI on either side of your 72 number. Reverse divergence of HH price LL indicator.

Divergences happen all the time. I follow Tom DeMarks methods and what he says is the duration of the divergence matters and not how high/low or how many times in a row it happens but instead look for mild divergence, meaning relatively short term, which more often than not causes a price reaction. In other words count the number of bars RSI is in oversold/oversold territory for second peak/trough or any additional peak/trough. Depending on the indicator and time frame DeMark recommends 8-13 bars as a general range. As far as I know he only uses his own indicators so I can't say what he would recommend for RSI or any other non-DeMark tools.

So if a trend has a lot of momentum behind it divergence will also continue longer and likely not have much of effect or not clearly show if it did or not except in possible hindsight if you squint hard enough. ;-)

BTW was going to try to bring up your chart on TradeStation to get a clearer picture but symbol seems to be cropped out?

 

[Arni]

Hi SunTrader, Wow, had to read it twice to get the gist of it
It's the E-mini S&P 500, Aug 1st, 15 min chart, 18:00 pacific time

leading to the divergences, on the daily chart there's a rising wedge forming. at $4400 there's a nice resistance area creating a triple top within the wedge- please correct me if I'm wrong - I was waiting for the pattern to confirm by either breaking out of the trend line, the MAs, or the zone area, but instead it just rose to $4433. but the trend line in the RSI is broken to the downside

Thank you so much for helping, I'm always trying to learn more, what books or forums would you recommend as an new trader

 

[easymon1]

Hi everyone
I’m new here,my name is Arni
have a question, which divergence carries more weight, exaggerated, regular, or hidden? or they’re all the same but become more forceful as they print on major S/R areas/zones?
Could you have foreseen that green candle with the question mark? it printed on the 1h TF when momentum on 4h was negative
Where would you have entered a short trade?

Hey Arni, welcome aboard.
Are you familiar with the RSID Failure Swing Entry?
Word to the wise, run some stats on a dozen or two to see whether you like them enough to run stats on 80 more of them to get the hang of 'em. They can run and run against you if not careful.
Look at a number of them before betting the farm.

A major benefit of a successful Failure Swing Pattern is that a Cascade of Continuation Patterns can provide profits as support levels are met and breached on the way down or opposite for a Long RSID Failure Swing.

When you see a good one, look for More Trades during the subsequent move.

Hammers at support and resistance are a Lot easier to run stats on and happen much more often imho.

Failure Swing Pattern
https://elitetrader.com/et/threads/...st-right-here-baby.335635/page-5#post-4930245

https://elitetrader.com/et/threads/...st-right-here-baby.335635/page-7#post-4969346

 

[easymon1]

Could you have foreseen that green candle with the question mark?

If that's an important question, you would want to look at price action at that price level in the past, there may well be a prior swing or resistance level that's not obvious on That chart image but if a view further back in history is shown, you may find an Easy Answer. There may be a Trend Line Breezin through there.

Alternatively, If a trader generates Stats on enough occurances of the Failure Swing Trade, then a minimum number of Ticks Divergence will emerge in the numbers from which your probability of success may correspond. Eg, a trader that has them in His toolbox stated that for the ES futures contract 2 points was the minimum difference at a time when the price of ES was much less than it is today. Do some stats if you are a systematic trader. If you are not a systematic trader then ....

 

[sebking1986]

I only tend to use DXY as a metric to measure divergence on EURUSD and to an extent on GBPUSD. This normally tells me most of what I need to know for upcoming direction on those pairs.

 

[SunTrader]

Hi SunTrader, Wow, had to read it twice to get the gist of it
It's the E-mini S&P 500, Aug 1st, 15 min chart, 18:00 pacific time

....

Ok so the area you picked was kinda a double top zone (intrabar basis) from two days prior but adding 5-34-5 oscillator (that I use mostly for Elliott Waves counting), which nowadays is pretty much standard on many trading platforms, you can see at the bottom 13, 4, 2 then 5 and 1 up bars first showing a slowing and then a Zero(0) line crossover into the decline. Doesn't always happen this cleanly and I don't generally watch 15 minute charts so I sure didn't see it live. But that's the idea. Note blue/red colorization of histogram changes when new bar is less than or greater than two bars back - not the prior bar. In other words 12:00 is compared to 11:30, 12:15 to 11:45 etc which helps filter some of the bar to bar noise.

As for where to learn, here on ET is good - after also filtering out some of the noise and filtering out a lot of noise on youtube.

But I've learned mostly be reading shelves of books (avoid any here that say books are a waste of time) and ...... by doing. Doing is the best teacher of all IMO.

 

[Arni]

@easymon1 Hi Easymon1, Thank a ton for these mark ups, had I looked at the charts for another week, I wouldn't be able to find what you have

I'm ok at finding patterns but figuring out what they mean where they print is something that need quite a bit of hammering

Just read Bulkowski on failure swings, if I got it right, you enter after the neck line in the RSI (M or W) is broken to the direction of your trade. Right?

So,when I'm looking for more trades during the subsequent move to ride the trend, is it enough to make sure retracement of each impulse in MACD is above the zero in uptrend and below it in downtrend?

 

[easymon1]

if I got it right,

If Bulk's instructions match those in the attached image, ...

enough to make sure retracement of each impulse in MACD is above the zero in uptrend and below it in downtrend?

MACD does not 'speak to me' so not something I use, but if you use the search function here at ET, you should get Plenty of threads on that.

What's worked for you so far?
Do you like to use a trading plan or do you like to trade in a more freeform fashion?

 

[Arni]

I only tend to use DXY as a metric to measure divergence on EURUSD and to an extent on GBPUSD. This normally tells me most of what I need to know for upcoming direction on those pairs.

Thanks Sebking1986, I'm not familiar with DXY, but just added it to my learn it and quick list