Divergence can be said to be an early warning signal , reminding investors that the market may be about to turn, but not every deviation will bring about the expected reversal. Like trading strategies, cross-validation and filtering are required to obtain stable Analyze the results.
For several presentation methods of divergence, the following simple diagrams illustrate:
The recessive divergence pattern mentioned in the above chart is relatively rare , and investors can just keep in mind the key points. There is also a kind of variation divergence that is rare, that is, when the two high points of the price are flat and the index gradually decreases, or The two low points of the price are flat and the indicators are gradually rising. It is good to remember the key points in these situations. In fact, in the process of trading, compared with this type of deviation, most investors will still choose other methods with higher stability for analysis. .
Since the divergence is only a signal, it means that it must appear along with the K-line pattern. The common reversal patterns are double top/double bottom, head shoulder top/head shoulder bottom, cup handle, bowl male pattern There is a chance of deviation phenomenon, and then I will summarize 9 kinds of basis for judging the correct deviation with readers.
1. Choose one of four types
The K-line price must have one of the following four types before it is possible to complete the first stage of divergence:
☆ Increasingly higher highs
☆ Increasingly lower lows
☆ Double top
☆ Double bottom
If the current price cannot clearly see one of the patterns, then the phenomenon of divergence can be said to be impossible.
2. Continuity
After connecting the double peaks/double bottoms that meet the first point, the two reference points must be continuous or similar , and peaks/bottoms of the same level cannot appear.
3. Mainly new style
When connecting the peak/bottom of the second point, the latest pattern should be used to judge . If the latest trend has double peaks, the double bottom in front cannot be used to judge the divergence. Similarly, if the latest trend has double bottoms, then You can't use the double peaks ahead to judge, because it is illogical to use the old wave pattern to judge the deviation itself, and even if it matches the pattern, it has already gone through.
4. Select indicators
What needs to be selected here are oscillating indicators and indicators that cannot be completely affected by the K-line price. If the moving averages and Bollinger Bands are calculated based on the price of the K bar, and the displayed indicators are used as an aid to judge the deviation, there will never be a matching pattern. Oscillating indicators are different in that in addition to K-bar prices, factors such as trading volume and capital flows are also included. In this way, corresponding signals can be presented when the market and prices vary.
Five, high and low
When the K-line judges that the divergence point is two high points, then the part corresponding to the indicator must also be two high points.
Conversely, when the K-line judges that the divergence points are two low points, then the part corresponding to the indicator must also be two low points.
Six, the time is close
The time period of the price and the indicator needs to be consistent , but considering that most indicators will have a certain lag, this part can be flexibly opened, and it does not have to be completely consistent, but at least it must be very close, and try to maintain a distance of 3 to 5 K lines before and after. Inside.
Seven, the opposite direction
As in the chart provided at the beginning, the slashes connecting the K-line and the slashes connecting the indicators must have different directions , one must be upward sloping, and the other must be downward sloping. In the worst case, one of them can be allowed to be flat, but the two must not be in the same direction.
8. Time to enter the market
If you find a divergence signal , it means that a period of rebound has already begun, which means that this period of divergence has begun to exert its effect. In this case, investors are not recommended to enter the market again. After all, the best time has passed. I would rather Wait for the next opportunity, and don't take huge risks because of a little profit.
9. The ratio of time zone to space
Divergence is the same with all techniques. Compared with the divergence signal in the 15-point chart and the divergence signal in the four-hour chart, the four-hour chart must be better. Although there are more opportunities for signals to appear on the 15-point chart, there is not much room for manipulation. Compared with the four-hour chart, it takes more time to appear, but relatively speaking, it can also bring larger profit margins.
It is very dangerous for trading to enter the market rashly relying on divergence signals . If there is a divergence, but you are not very sure about the direction of the market, then it is best to wait and see first. If you really want to enter the market The cost of placing an order should also be reduced, and the market should be tested first with a relatively small amount of funds. If the direction is correct, add more to fill up the position.
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