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Divergences

Discussion in 'Beginners Bootcamp' started by ____________, Dec 18, 2007.

  1. ____________

    ____________ Private

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    I have a doubt, in MACD or other indicator with zero line, what happens when market makes a new high but the indicator fails to make a new higher peak, insteadd it's behing zero line, its still a divergence? its weaker or stronger than when indicator makes the (in this case) peak up the zero line.
    heres the example
    [​IMG]
    thnkx
     
    #1 ____________, Dec 18, 2007
    Last edited: Sep 12, 2011
  2. TJ Woods

    TJ Woods Recruit

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    Divergence Response

    Private,

    Divergence, IMHO, is viewed subjectively. However, if this aids in your understanding:

    1) if Price makes a higher high but the Oscillator makes a lower High it is considered Bearish.. you may note the affects in Price action shortly after the divergence.

    2) if Price makes a Lower Low and the Oscillator makes a Higher Low it is to be regarded as Bullish.

    Try bringing up a RSI and note the comparison with the MACD and Price action.

    Hope this helps.

    TJ
     

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