Complex trading system #3 (MACD Divergence)

can you tell me please, another filter for the strategy, and a strategy exit. thank you

Hello, thanks for the post.

Divergence is a great phenomenon. But your examples do not seem correct.

Divergence is
Lower lows/ higher lows along price, and reverse on indicator.
OR
Lower highs/ higher highs along price, and reverse on indicator.

When price gives you flat or near-flat lows/ highs but indicator gives you higher/ lower lows/ highs, this means price is not responding to indicator action, and is beating down the indicator. I call it a failed-indicator situation.

In these situations, price either enters a choppy range-like waves, or continues along the original big-trend direction.

Your first example is not divergence - its a failed indicator situation, since price did NOT give you lower lows against the indicator higher lows. Rather, price gave you FLAT lows, so it failed what the indicator was attempting to do. You were successful in trading this by chance, because of an uncommon bull pressure at that time, perhaps due to a fundamental event. Look at the super-long bull candle - it is not commonly seen. That helped you, otherwise, price was headed down along the original trend, since the price had failed the indicator.

Thanks.

30 min would work fine, but if you have a choice, go with 1 hour +, and then after I get a signal there, I could seek a better entry opportunity with a smaller time frame, such as 30 min or so.

Regards,
Edward

What is the best time frame for divergence...is 30 min going to give too many bad signals or is it best to go to 1 hour +?

this is what i'm talking about. i use CCI 20 divergences on any chart with a 10/20 EMA cross to filter out weak divegences. otherwise its the same. really powerful. i don't work any more. just trade a few hours a day an make great living.

Seems like no one else following this post?

Kev

Hi Kel,

Are you strictly following Edward's rule or have you added in any modification to the rules?

Brgds,
Kev

Hi all,

Have tried on EUR/YEN for past few days. The results are encouraging so far.

Thank you Edward!! Keep it up...

Kel =)

Dear all,

Has anyone been profiting consistently using this timeframe of M30?
Can pls share more of any progress using this strategy?
Very interested in this post :)

Brgds,
Kev

Dear all, has anyone profited consistently using tis MACD Divergence strategy? If yes, did u combine with any other indicators, as mentioned by Ayoade?

Thank you, Mr. Ayoade,

Good stuff. I appreciate your tips and advice; (took notes for myself).

Best regards,
Edward

Hi Edwards,

I appreciate this your system on divergence. However, I want to comment on your parameters of MACD -5,26, 1. I dont really support it as you rarely see divergence on this parameter. I use MACD default parameters instead. Your stockastic parameter is ok and I add Commodity Channel Index to it.

Each time I see divergence or convergence on MACD, or Stochastic, or CCI, I dont wait for the crossing of EMA 3 and SMA 13, reason is that a lot of pips would have gone before this crossing. Instead I use CCI touching my 100 or -100 depending on the type of divergence. I dont stay too long and minimum of 20 pips is always guaranted.

Edward, divergence is a strong indicator. Sometimes too, in combination with the cci, i check it out with stochastics 20, 80 points to know when to pull my buy or sell triger. A combination of bolinger band in this case suggest the limit of the trend. If you would not mind, insertion of fibronaci retracement would suggest the first level of retracement of the trend as divergence/convergence signals reversal of current trend.

Another hint that could give you more confidence when trading this system is when you see your MACD tending towards 0, or you see your RSI crossing line 50, (above or below) as the case may be. This could be wonderful.

Edward, you are doing a great work here. I respect your brain. Keep it up.

To your success.

Mr. Ayoade Awonigba
Oracle of forex trading
www.mozanforex.com
234-805-202-9796

Yes, you can use those peaks in order to identify a divergence.

Regards,
Edward

Hi,

If two peaks on MACD form a divergence but first peak is form just before the close of a trading day and the other peak forms just after the open of the next trading day, is there still a divergence?