Divergence - Truth or Myth?

[Ping]

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There seems a lot of topics dedicated to trading using Divergence.

Is it a truth or just a myth?


What's your opinion on this?


A good read re divergence, and its actual occurrence, and explanation can be found here - http://www.trading-naked.com/Divergence.htm




 

[Sanjo]

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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.

[Ping]

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Do you use this method?

It seems the situation doesn't present itself as often.  But I heard, when it does, the "reading" should be accurate for you to be able to open a position?


 

[forexboy]

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You have to take note that using a divergence to gain entry signal is not advisable because it provides too many false signal.

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Is there a way to filter those false entries?






 

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GBPJPY

Daily Chart, PA and stoch divergence.

BEAR mode?