Just been reading up about this.
I don;t see the difference between standard bearish divergence and hidden bullish divergence.
Bearish divergence is described as Higher highs while the indicator shows lower highs basically this shape <
Hidden bullish is described as higher lows and indicator shows lower lows.
This shape: <
It’s the same thing isn’t it? Higher lows are usually coupled with higher highs on the same chart. Hidden Divergence Report
In an up trend both highs and lows are in this direction /
Hidden divergence shows this <
[B]But why wouldn’t you follow the higher high of the indicator?[/B]
Classic divergence highs and lows are in this direction /
Divergence shows this \
The basic premise is that usually when price is making higher
highs, the indicator makes the same higher high. (or vice versa
when the price makes lower lows, the indicator makes lower lows)
But occasionly when the price makes a HH, the indicator makes
a lower high. Coupled with other TA ie IB/OB, fibs etc. can be
a useful added tool.
I don’t understand why you would look at that picture and say, oh it’s higher lows on the PA and lower lows on the indicator, therefore bullish hidden DV and the trend will continue.
Why wouldn’t you say, oh it’s higher highs and there’s 3 peaks in the indicator each lower than other. It’s going to reverse.
Also, the pattern in Fig.1 (Classic) is the same as Fig.3 (hidden) in the article
Even in this article, Fig 1 and 2 show the same thing.
Fig 1: Trend is in 1 direction Up.
price is higher higher higher, indicator is lower lower lower normal divergence.
Fig 2: Trend is in one direction down:
price is lower lower, indicator is higher higher. To me this is normal divergence as with fig 1 but apparently it’s reverse divergence and the trend will continue?
Lost
You need to re-read the articles concerned & read them this
time, not put your own interpretations on them.
I have taken the image & placed the text underneath which may
make it more simple to understand.
Take a look at the timeline as well, months, as well as the amount of
movement the price has made.
You are looking at it as a finished chart instead of taking each piece
apart.
What would you have done when you saw 6 go lower than 5 on the
indicator, but price checked as though at resistance?
(Hint: I would have looked for some confirmation to appear elsewhere,
ie at fibs points or candlestick patterns or a known resistance line or
all three)
What would you have done when you saw 6 go lower than 5 on the
indicator, but price checked as though at resistance?
That would have indicated to me that it was going to reverse pretty soon.
The indicator is showing a downward trend both on the peaks and thr troughs whilst the PA is going upward. Therefore it looks like a bearish reversal not like the bullish trend is going to continue
5,6,and 7 on the above is the same as AB below yet the description of each chart is different.
Not sure if this will help, but it’s how I envision it when dealing with trends…
Bullish - Looking at LOWS of both price and oscillator
Regular (Reversals) - if price is in a downtrend and making lower lows, but the oscillator is not making lower lows (it’s low is higher than it’s last low), then bears are exhausting and price could go up.
Hidden (Continuation) - if price is going up and making higher lows (retraces), but the oscillator is not (it’s making lower lows), then price could continue
Bearish - Looking at HIGHS of both price and oscillator
Regular (Reversals) - if price is in a uptrend and making higher highs, and the oscillator is not making higher highs (it’s high is lower than it’s last high), then bulls are exhausting and price could go down.
Hidden (Continuation) - if price is going down and making lower highs(retraces), but the oscillator is not (it’s making higher highs), then price could continue .
Hidden divergence is when you want something to indicate if the “retrace” is just a retrace, and not a reversal.
I guess the question is how do you know whether to compare the highs or the lows? Generally when you have higher highs, you also have higher lows on the PA…
Hi
The reason I didn’t draw a line on the highs was because price and the oscillator matched ie they were both going down (lower highs) so there is no divergence.
So then check the lows…price lows going higher, oscillator lows going lower…lows are diverging.
Right…now that is exactly what is causing me the confusion.
I can see how you say 1 is diverging but which do you believe the trend confirmation from the highs or the divergence from the lows.