I do love divergence both hidden divergence or normal one. I use three different indicators to spot divergence and enter the trade. On this post, I want to show a high probability trade setup based on divergence with Moving Average bounce.
Indicator I am using:
- Bollinger Bands (20,2)
- Moving Average (60)
- CCI (14)
On M15 time frame above, AUDUSD pair is in down trend. It is wiser to trade along with the trend. OK, we compare those two tops that were make lower high but the oscillator (CCI) makes higher high. This is the hidden divergence. As you see, the price also hit the Moving Average line.
How to trade:
When the price/candle close below the moving average line, enter short with stop loss at the previous high (10 pips only on the example above).
If we open the M5 timeframe, it shows normal divergence. This condition is a perfect one, there is hidden divergence on M15 and normal divergence on lower timeframe (M5).
0 comments:
Post a Comment