Hidden Divergence - The Silent Thriller
September 24, 2012 at 6:45 PM The ability to spot divergence in the Emini Futures gives traders a distinct advantage.
How To Trade Hidden Divergence - The Silent Thriller
Typically when you hear someone speak of divergence in a particular market, they tend to be looking for a reversal or change of trend. In a bullish market they anticipate prices heading lower and in a bearish trend they anticipate prices heading higher.
Ordinary Divergence is easy enough to spot once you train your eyes. In a bull trend price will make a lower low while indicator you are using makes a higher low. In a bear trend, prices will make a higher high while the indicator will make a lower high. That is ordinary divergence and is used as early warning that the momentum in the current direction is waning or has come to an end. Popular examples of the momentum indicators used are the RSI or Relative Strength Index, the Stochastics Oscillator and many others. Of the two mentioned both of these have a range of 0-100. While they are commonly used and readily available in most trading platforms, we have developed several proprietary CFRN Tools we believe do a vastly superior job of identifying divergence more accurately and on a more consistent basis. Make no mistake, understanding ordinary divergence is a tremendous trading technique.
