Hidden divergence is a powerful trading setup when we manage it correctly. The example below will show you how to trade hidden divergence the right way. Both normal or hidden divergence need a confirmation before it really a normal or hidden divergence. A good confirmation is the trendline breakout. And as my own experience, MACD Histogram is the perfect indicator to detect divergence. See example below (M15 time frame)
At the left of the chart above, see how price break the Bollinger Bands and MACD Histogram correspond with this price movement. At the first top, price retrace a little bit but the histogram falls further down. When we compare the higher low on the price and the lower low on the histogram, this condition is called as hidden divergence.
Hidden divergence can be found on any time frame where higher time frame give better result. Here is the H1 time frame hidden divergence
Practice your self to detect hidden divergence and trade it. Always put your stop loss on previous high or low.
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