Divergence is a naturally occurring pattern
GBPCHF…reason for trade is regular H4 bullish divergence. Entered a few hours ago… but this is a long term trade…
For those dont know about divergence, it is one of the first few signals that we may have a change in trend. See how the price came down on that second leg but the Stochastic made a higher high…
If you want to trade this set up, it is often best to wait for an impulse move in the expected new direction then wait for a retracement to confirm change in direction. If you are aggressive, enter on first pull back ( best prices are usually around 61.8 fib retracement) of first impulse move…
If you are a bit more conservative, you can wait for a break of the first high, then enter on what will be the second retracement by then you will have 2HH and 2 HL…
That in a nutshell is how to structure your trading…
There is nothing new here but This is worth thousands of pips…
if you back test it and get confident… then always have at least 2:1 profit to risk ratio… use a calculated size ( check files section for a free lot size calculator).