Divergance Without Indicator

[pipsaholic 10]

Hi,

 

Is it possible to know divergance through pure price action without using any indicators?

 

Thanks.

[zdo 20]

:haha: ... that is an excellent stupid question (if I understand it correctly) …

 

After considerable screentime and experience with simultatneous price charts and (any) oscillator, one can develop an eye for which retracement angles and durations will almost inevitably result in standard ‘divergence’ btwn price extent and indicator extent on the next ‘with trend’ thrust…

...ie and more generally, the formation (or not) of divergences of all types is literally in the math of the oscillator…

...can further the discovery of strengths and weaknesses of a particular oscillator and its parameters and also help with understanding the potential and limitations of conventional ‘stochastics’ processes in trading in general. hth

[BlueHorseshoe 10]

Hi,

 

Is it possible to know divergance through pure price action without using any indicators?

 

Thanks.

 

Not really. Divergence must always be between two things, ie one is 'diverging' from the other. If you were just looking at price but no metric, then what could the price be divergin from. The prices of two seperate markets can, of course, diverge from each other, although 'divergence' probably isn't the term that would be used in that instance.

 

Having said that, it may be possible to estimate what the reading of an indicator would be, and to identify where divergence is most likely occuring that way. I can't see why you'd want to do this though - surely it would always be easier and more reliable just to use the indicator?

[phantom 16]

Not really. Divergence must always be between two things, ie one is 'diverging' from the other. If you were just looking at price but no metric, then what could the price be divergin from. The prices of two seperate markets can, of course, diverge from each other, although 'divergence' probably isn't the term that would be used in that instance.

 

Having said that, it may be possible to estimate what the reading of an indicator would be, and to identify where divergence is most likely occuring that way. I can't see why you'd want to do this though - surely it would always be easier and more reliable just to use the indicator?

 

BTW, BlueHorseShoe loves Anacott Steel.

[BlueHorseshoe 10]

Thanks I knew BHS was from something,just couldn't remember what it was

 

Ha! I've been signed up to TL for nearly a month now but nobody has made that remark yet! I was very suprised when I registered that the name hadn't already been taken.

[Kiwi 16]

1. Can someone correct the spelling of this thread's title? It's embarrassing.

 

2. Of course you can perceive divergence without an indicator. Divergence is typically between some so called measure of strength or acceleration and price. So, if you can see price and mentally differentiate it then you can see divergence. Just look for more bars to get the same price difference for macd/rsi and pay a bit of attention to closes at the highs (up = strong) for stoch divergence..

[david22 10]

I look at divergance between indices, sectors and bonds.

eg. Dax vs eurostoxx50, es vs dow\nq, es vs sectors, es vs bonds..

 

so if you see a intraday double top on the dax, you want to see a lower

high in the eurostoxx50.

 

or if you see a intraday double bottom on the es, you want to see a double top

on the 10yr bond.

 

or if you see a intraday double top on the es, you want to see a lower high

on the dow\nq..

 

also you can have divergance between indices and market internals ( tick, advancers\decliners, up\down volume at an intraday level.

Edited April 11, 2012 by david22