Would you consider this a strong bearish divergence? Would you get in on this trade? It’s got lower highs and higher highs, and stochastics has now crossed over from oversold territory. Daily and weekly charts stochastics is pointing up however, and weekly charts is coming fresh from a bullish divergence, which I made 160 pips from! closed position now due to uncertainty, thinking of going back in opposite direction due to the possible bearish divergence on the 4 hour chart?
Hi Mkcity,
Its indeed bearish divergence shown in your AUD/JPY chart, trading divergence is counter trading strategy expecting the current trend in market already finished and ready to change.
Base on your view, you say daily and weekly showing bullish sign which is contradictory to the divergence shown in 4 hours chart, personally if I take this trade, I would want to setup clear stop loss few pips from the current fresh high. Knowing the trend is not adjacent to longer time frame then we would want to be more careful.
Notes: price can keep going moving at its initial direction ignoring divergence
