i was looking at GBP/USD yesterday night. i saw there was divergence, and went in to sell. although data point to buying. looking at the trend there is more sellers than buyers, still it went up. why?:36:
You are comparing price to the movements of a lagging indicator. The divergence indicates that the momentum of price may be changing. Sometimes it works. Sometimes it doesn’t.
not really, i think it’s a show of trend and you can see from divergence whether trend is buying or selling.
if not, what do you use? thanks!
No, I am pretty sure of it 
I have found comparing divergences between closely correlated indices works rather well on the daily timeframe. There are two problems you will eventually encounter:
- You can wait weeks before a divergence even appears and
- You never know when the two indices will fall out of correlation negating the divergence you just found.
Going back over charts you can find perfect divergences everywhere. Trading divergences on the live market is much tougher (for me, anyway).
i still prefer divergence. i have used bollinger band and sma, atr, it’s not good enough.
What time frame were you looking at? Using divergences on shorter time frames might not always work because there might be short-term factors that are affecting price action more. For example, GBP/USD encountered heavy buying yesterday because of risk appetite and strong UK retail sales report. This lessened the impact of technical analysis.
normally, 15 mins and 1 hour, sometimes, 4 hour, just to see it’s uptrend or downtrend.
Have you thought of tracking divergence of collated pairs? … GBP/USD and EUR/USD same zoom and time frames… The premise is that sometimes one pair will reverse first suggesting change in market flow and the reversal of the other pair G/U or E/U. I will try to find an example for you and add it to this post as content. Maybe 4hr and 1hr… My trading style now is nothing below 1hr. Maybe I will take a look at it myself… really been waiting for things to iron out a bit with the Fed Government.
Cheers
Additional Content:
Hidden: Higher Highs and Lower Lows
Pair: G/U Lower Highs and Lower Lows | E/U Higher Highs and Higher Lows
Below… Makes no different with chart type line and erea charts still relevant to candles and bars
Did you consider that you may not be working and the divergence is working just fine? What I mean by that is that maybe your interpretation was wrong and trading is not an exact science, but rather an art form. You should not act on one signal alone and just because a divergence forms does not mean that the price will automatically move lower. There are plenty of factors which go into it and GBPUSD did start to correct.