Why will numbers 2 and 3 not be considered Lower Highs and number 4 not be called a Higher High?
In this example 2 and 3 are not called anything, but 4 is called a Lower High.
I find this confusing. Could someone please explain?
How do you guys decide or determine which highs are HH and which are LH? (Same goes for LL and HL.)
If Point 4 did not exist, 2 & 3 would then be your “lower highs”.
The fact that Point 4 printed, invalidates the “lower high” requirement (for 3) in which price must be maintained beneath the most recent swing point.
Since 4 is still maintained beneath 1, it’s technically still a lower high.
Check out this post - it’s a live example of exactly what you posted / the theory you’re learning about.
[QUOTE=“hps;619756”]Thanks guys for your reply’s. This is making much more sense now. @FOREXUnlimited, following actual trades is most helpful. Thanks. @etfak, you gave me a few things to think about. Thanks, hps[/QUOTE]
My next question should probably be part of another thread, but in order to check out divergence, I need to know the correlation between the EMA - mine set to 10 & 25 EMA on the close - and the oscillators I will be using.
Now, what should the settings be for the stochastic and MACD? I just left it on the defaults as per MetaTrader4.
Maybe I should rather ask, what/how do you determine the correlation between EMA’s, Stochastic and MACD?
There are a lot of settings for Stoch and MACD and I don’t know which is best (or rather advisable) to use.
(I understand what “Simple”, “Smoothed” and “Exponential” means, but I don’t know which to apply when and where.)