iCharts Discussions

[casper]

very nice point arjun

and ur understanding is clear too,

all i would like to tell u is,

1.the next candle after the red or confirming candle was a "hammer" its not an ordinary candle but its a potential trend reversa (bull to bear)l candle, if i were short, i would have booked here seeing a hammer, for obvious reason

what i want to tell u more is "all hammers are not dangerous" since u posted a nifty spot chart where we can not see OI or volume, so we got to guess

BUT WHENEVER U HAVE A HAMMER/INV HAMMER WITH SURPRISINGLY INCREASED VOLUME U CAN BE SURE THAT THE TREND IS GOING TO REVERSE FOR SOME TIME

plz take a back test and u will be surprise to see that at least 90% time,a hammer or inv hammer (hammer in bottom and inv hammer in top only) with added vol, so much vol that u will start wondering "from whr it got so much vol??" has changed a trend

under this light (under previous exp of hand burning on such cases)it prompt me to close my position immediately noticing such a candle

and as i dont hv nifty fut chart with me (i presently hv basic chart as now im concentrating more on comm) so i "suspect" that this hammer was that high vol hammer too, otherwise it wont change the trend so easily
any body who is viewing this thread with a premium subscription can confirm the same , i request all to check it out and tell me it is a high vol case indeed or not

secondly

as 34 ema is always a trend decider, right from 1min tf to weekly tf (dont ask, take a look in ur chart and u will know what i said) so make 34 ema as ur potential target for divergence trades always

if it breaks and sustain above/below 34 ema in ur trading tf, then good, or close it on 34 or near 34 itself, if u r not satisfied with the gain, use high leverage (this is what i do personally, shorter move, quick in book and high leverage...... but it will be a high speed bike, so be aware too)


finally

(well i dont wanted to tell u this i swear)


what is ur rsi u r using????

what u said ???? rsi 14???

ok got it

u know what it means???

it means ur rsi is using latest 14 candles to calculate the relative strength, in this case, if u have two tops or two bots where there is more than 12 candles in between (12+2=14) then

DO NOT TRADE THAT DIVERGENCE, WAIT FOR A WHILE TO CHECK IT IN JUST HIGHER TF, IF THATS VISIBLE IN HIGHER TF, FULFILLING ALL THE CRITERIA THEN ONLY TRADE IT OR FORGET THAT

like if we have two tops in 5 min tf, in between 20 candles are there, check it in 10 min tf now. if u can see the same set up in 10 tf, then only we trade it, otherwise, dont trade it any way, bcoz its too, too wide case to be productive actually

by the way

actually what happens

as div is nothing but a non confirmation, so naturally it starts in 30 second tf first, some of them works, and some do not, the div which did not worked, will be carried to higher div like 1,2.4. 5, 10 and so on

this way, a div can be carried to a monthly time frame too, but originally it started in 30 sec tf actually

so if we take an entry with smaller tf but lots of distance in between, we run into the risk of getting stopped out

so whenevr u see distance between two tops or two bots is more than ur rsi's (or any indicator u use)look back period, make sure u check it in immediately prior time frame for confirmation

clear now??

[Arjun20]

[rk_a2003]

"divergence is useful for choppy or range bound market and clearly a failure of TRENDING MARKET"

To substantiate further the above statement of Casper posting copy and paste from a web site.

**************************************************************************************************************************


Before getting too excited about divergences as great trading signals, it must be noted that divergences are misleading in a strong trend. A strong uptrend can show numerous bearish divergences before a top actually materializes. Conversely, bullish divergences can appear in a strong downtrend - and yet the downtrend continues. Chart 6 shows the S&P 500 ETF (SPY) with three bearish divergences and a continuing uptrend. These bearish divergences may have warned of a short-term pullback, but there was clearly no major trend reversal.

[casper]

yes rk

its true

even if u check bata india in recent times, in 60 or eod tf, u will see how div came and did not produced any significant down move

in stronger up trends, we use - div for booking and + div for adding more and in stronger down trend, we use + div for booking and - div for adding more

the more u use a tool the more insights u will gather this way

[singh.ravee]

[quote="rk_a2003"]"divergence is useful for choppy or range bound market and clearly a failure of TRENDING MARKET"

rk_a2003,

hello.

Divergences are not misleading, our interpretation is.

To me divergences simply mean trend is loosing strength. I need confirmation from price for the same. Now div in different tfs will have diff implications for me. When you take entry and when you exit is important in trading divergence.

The way casper bhai is using divergence is good.

Regards

ravee

[chennuru]

Dear Friends,
RSI never mislead you, u have to see the hidden divergence for higher lows in stock and lower lows in RSI,
on every stage it mathes exactly, means follow up of existing trend,
any comments are welcome,
chennuru

[chandrujimrc]

Dear casper,


I don"t know whether you have noticed or not.All call options are in bearish divertgence with nvk set up and all put options are in bullish divergence with NVK,most of them are 34 EMA overdue in 5 mnt TF..Let us see mkt"s response.

chandru.

[rk_a2003]

Quite an interesting observation Chandru! Are they giving signalls to us! let us see.

[rk_a2003]

Hi Singh.ravee !

This was a copy paste from a website. How ever since I sponsored it by posting here I would like to ask you what precisely wrong in this statement "it must be noted that divergences are misleading in a strong trend" when you read it along with the Chart attached;Which is supporting above statement. And also refer casper post he also gave same example refering Bata recent upmove, though chart not attached.

I don't see any thing wrong in the above statement if we read it along with the context.

Regards
RK

[casper]

[casper]

[casper]

[maneesh007]

RK and maneesh bhai, if u r around, plz check once as u two were chasing me for a few days regarding divs


Dear Casper Bhai,

How can we afford to miss ur posts...actually I am watching all ur posts silently(Totally speechless )...trying to implement it in real time & then revert back to u with some realtime confusions/problems...

warm regards
Maneesh Bhardwaj

[vinay28]

Referring to RK's example of S&P.
Casper - did we not have a similar situation middle of last year?

I agree with chandru's observation of opp trends in calls and puts vis-a-vis nifty. Casper, according to me, there is one more possiblity and that is major players are hedging options and nifty, which is common when we are nearing end of a trend.

[peace69]