Properly distinguishing between retracements and reversals can reduce the number of losing trades and even set you up with some winning trades. Classifying a price movement as a retracement or a reversal is very important. It’s up there with paying taxes. *cough* There are several key differences in distinguishing a temporary price change retracement from a long-term trend…
Imagine this scenario. Price starts to rise. Keeps rising. Then it starts falling. And falling some more. And falling some more. And then it starts going back up! Have you ever been in this situation before? It looks as though price action may be rallying and a buy trade is in order. WRONG! You’ve been…
What is a range-bound market? A range-bound market is one in which price bounces between a specific high price and a low price. The high price acts as a major resistance level in which price can’t seem to break through. Likewise, the low price acts as a major support level in which price can’t seem to…
What is a trending market? A trending market is one in which price is generally moving in one direction. Sure, the price may go against the trend every now and then, but looking at the longer time frames would show that those were just retracements. Trends are usually noted by “higher highs” and “higher lows” in an uptrend and “lower…
When two people go to war, the foolish man always rushes blindly into battle without a plan, much like a starving man at his favorite buffet spot. The wise man, on the other hand, will always get a situation report first to know the surrounding conditions that could affect how the battle plays out. Like…
Please keep in mind that we use divergence as an INDICATOR, not as a signal to enter a trade! It wouldn’t be smart to trade based SOLEY on divergences since too many false signals are given. It’s not 100% foolproof, but when used as a setup condition and combined with additional confirmation tools, your trades have a high probability…
Have you had your fill on learning how to trade divergences? Let’s review! Divergence is a popular concept in technical analysis that describes when the price is moving in the opposite direction of a technical indicator. There are two types of divergences: Regular divergence Hidden divergence Each type of divergence will contain either a bullish bias or a bearish bias….
Divergences are used by traders in an attempt to determine if a trend is getting weaker, which may lead to a trend reversal or continuation. Before you head out there and start looking for potential divergences, here are nine cool rules for trading divergences. Learn ’em, memorize ’em (or keep coming back here), apply ’em to help you…
While using divergences is a great tool to have in your trading toolbox, there are times when you might enter too early because you didn’t wait for more confirmation. If you keep entering too early, you’ll keep getting stopped out (you do use stops right?!) and you’ll slowly rack up losses. And you know what happens when…
Now it’s time to put those Jedi divergence mind tricks to work and force the markets to give you some pips! In this lesson, we’ll show you some examples of when there was a divergence between price and oscillator movements. How to Trade a Regular Divergence First up, let’s take a look at regular divergence. …