Best Forex Trading Software and System For Divergence Pattern Analysis

Best and Easy Forex Trading Software For Divergence Pattern Analysis –  There are many technical indicators traders use, and among the most common is the Stochastic Oscillator.

There are multiple trading methods involving this indictor, including using it to spot divergences.

 

Spotting a divergence can alert to you potential trend reversals, and highlight underlying strength or weakness which may not be easily seen on the price chart.

First, let’s take a look at what the Stochastic Oscillator is, and how it is composed, so when you trade with it you’ll know what it’s telling you. Then we’ll delve into divergence and how to use it. I’ll also touch on two popular stochastic divergence trading strategies.

 

Stochastic Divergence

A divergence occurs when the indicator doesn’t move in-line with price.

For example, the price makes a new high, but the stochastic fails to reach a new high. Or, price makes a new low, but the stochastic fails to make a new low.

The former is a case of bearish divergence, because it signals potential weakness, and the latter is a case of a bullish divergence because it indicates potential strength.

When a divergence occurs, it should put you on guard for a potential change in price direction. Although, divergence is not a timing indicator; it may take some time for a reversal to occur following a divergence.

Therefore, don’t trade just on divergence.

When you have a bearish divergence, wait for the price to break lower before going short/buying puts.

 

Figure above shows the price making new highs, but the stochastic is not–a bearish divergence indicating a reversal could be coming soon, and it does.

 

Stochastic Divergence Trading Strategies

Ok ! this strategy i had used 4 year and make profit 20%-30% everymonth. Now i want to share this strategy for somebody who is a newbie in forex, i hope you got some help for started.

Actually have not exactly time. We working in forex and understand the London Open is a powerfull signal (my english is not good). So with my experience the divergence usually apear in new day at the Londen open time and that apear give you an exactly signal.

For the asian time you alway have breakout of divergence bacause the money put in to market is not large.

 

Divergence Pattern Analysis & Trading Rules

• Pairs : EU, GU, UJ, Gold
• Time Frame : H1, H4, D1 (M5, M15 can be for scalp but not recomend).
• Time Market : After London Open.

 

Strategy I

Long Rule :

• Waiting the Blue line appear in Stoch and Chart (the recomend is Stoch orver Buy 30 or 40).
• Waiting the Stoch line correct trend.
• Waiting the TrendLine Up.
• Entry a buy position.
• Stoploss 20pip from the candle appear Line. Take profit 30pips

Short Rule :

• Waiting the Red line appear in Stoch and Chart (the recomend is Stoch orver Buy 70 or 80).
• Waiting the Stoch line correct trend.
• Waiting the TrendLine Down.
• Entry a sell position.
• Stoploss 20pip from the candle appear Line. Take profit 30pips

 

Strategy II

• Use MACD on the larger TimeFrame. Example Chart on H1 and use MACD on D1.
• Looking for the trend. If trend go up we entry Buy only when the divergence appear and Sell only if trend down.
• Rule entry same above

 

 
Ok ! that’s all. Please ! sharing your experience and testing result.