Hidden Divergence | Nirvana Systems Inc. (2024)

FAQs

Is hidden divergence profitable? ›

Because it's a leading indicator, it can reveal what will occur with the price. Typically if a hidden bullish divergence gets created, traders should open a long position. But not every hidden bullish divergence is productive. There are multiple cases of unsuccessful hidden bullish divergence.

The one-hour chart or longer is the best timeframe for the RSI divergence indicator. Is RSI or MACD Better for Divergence? The MACD is better for showing trend reversals. The RSI is better for showing overbought/oversold areas.

Divergence signals tend to be more accurate on the longer time frames. You get fewer false signals. This means fewer trades but if you structure your trade well, then your profit potential can be huge. Divergences on shorter time frames will occur more frequently but are less reliable.

One of the ways beginners can implement the most profitable trading strategies effectively is by embracing the buy-and-hold strategy. This involves researching companies with solid fundamentals and stable earnings, then holding their stocks for a long time without being swayed by short-term market fluctuations.

Answer: between 50% (at 3 weeks) to 55% (at 3 months). In fact, changing the start date to 1995, which would lengthen the bull market and provide more samples shows that the success rates drop to 45% to 48%, respectively. In other words, bullish divergence fails more often than it works.

Hidden RSI Divergence is extremely strong predictor of a trend continuation or trend change. There are crazy amount of divergences happening at all the time frames. Find one, wait for the price to test it, look for the re entry price you want, confirm with other tools in your technical tool box and then trade.

Regular divergence can predict a short-term correction, and hidden is less reliable; therefore, it's worth adding indicators and patterns that forecast future price direction. You can test various technical analysis tools on the TickTrader platform for free.

Divergence in an uptrend occurs when price makes a higher high but the indicator does not. In a downtrend, divergence occurs when price makes a lower low, but the indicator does not. When divergence is spotted, there is a higher probability of a price retracement.

MACD 4C Indicator with Divergence This indicator, named MACD 4C, enhances the traditional MACD (Moving Average Convergence Divergence) by providing a visually intuitive representation with four distinct colors for the histogram bars. It offers a clear interpretation of market momentum and potential trend reversals.

The Triple RSI trading strategy involves using three different RSIs with different timeframes: 3-day RSI, 7-day RSI, and 14-day RSI. When all three RSIs are oversold (below 30), it indicates a buying opportunity; when all three are overbought (above 70), it indicates a selling opportunity.

How to master RSI divergence? ›

Divergences, whether bullish or bearish in nature, have been classified according to their levels of strength. The strongest divergences are Class A divergences; exhibiting less strength are Class B divergences, and the weakest divergences are Class C.

When you spot the bullish hidden divergence pattern, use it as a buy signal. Ignore bearish hidden divergence patterns in an uptrend. Do the opposite in a downtrend: look for bearish hidden divergence, and ignore the bullish patterns. Once you see the bearish hidden divergence pattern, then look to sell.

Failure of RSI Bullish Divergence

RSI Bullish Divergence can occur continuously in a downtrend, and taking long trades at this point is against the trend. If you look at image-8, RSI bullish divergence failed many times in a downtrend. In fact, the occurrences of many bullish divergences indicate a strong downtrend.

Regular divergence can predict a short-term correction, and hidden is less reliable; therefore, it's worth adding indicators and patterns that forecast future price direction. You can test various technical analysis tools on the TickTrader platform for free.

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The strongest divergences are Class A divergences; exhibiting less strength are Class B divergences, and the weakest divergences are Class C. The best trading opportunities are indicated by Class A divergences, while Class B and C divergences represent choppy market action and should generally be ignored.