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Chapter 18, Part II. Trading Divergences. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Advanced talks on divergences – Dynamic Pressure

    Although you can identify Dynamic Pressure (we will call it as “DP”) using simple MACD indicator, there is a better choice that exists. This is Joe DiNapoli’s MACD Predictor indicator. It looks like a simple red line on the chart. MACDP is a derivative indicator from MACD. While simple MACD uses two lines for trend identification, MACDP uses single line and price instead of second one. So, when price is above the red line, the trend is bullish, and when it is below it – bearish. Also take note that price crosses the red line right at the same time when simple MACD shows its line crossing. So they give absolutely the same signals. But MACDP also shows the precise price level when the trend will change and does it 1 period ahead of time. If you what learn more about MACDP – visit DiNapoli’s official web site:

    Coast Investment Software Inc.


    Chart #5 | 60-min EUR/USD with MACD and MACDP
    [​IMG]

    I’ve marked for you some crosses, so you might see their harmony. Again, using MACDP is more comfortable, but this indicator is not very cheap and is not available in a lot of trading software. So, we could use simple MACD as well for that purpose.

    Chart #4 | 60-min EUR/USD What is it?
    [​IMG]
    Let’s return to discussion of chart #4. We see some kind of divergence – MACD shows a bear trend, but price action does not support that. It could be in two different ways – price action stays flat or even rises. This is a bullish Dynamic pressure. It tells, that although trend looks bearish, sellers could not move price lower, hence the bulls are hidden but they are strong and control the market currently. Here we need to search possibility to enter long.
     
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 16, 2016
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