Since there are no such system that gives 100 percent accuracy in trading, the divergence it self sometimes also gives false signal. So, I highly recommend to use a trendline break to confirm the divergence. Sometimes even the indicator shows the divergence but the price still continue the trend because there is a very strong movements on the market.
On the chart above price has made two lows and the indicator (MACD bars) has made a divergence signal. But if we create a trendline connecting higher high and higher low it cannot break the trend line and bounce back to continue the trend.
0 comments:
Post a Comment