Nifty open gap up and traded down whole day. We have seen clear five wave completion on nifty hourly chart with negative divergence as shown in picture below. Any up move from here may extend the fifth wave. Channel breaking downside will confirm that down move has started. Some more chart like infosys, LT, etc are also showing negative divergence. so be cautious towards long side.
What if you believe a stock will continue to fall but would like to short at a better price or a less risky entry? Well guess what? There is a way! It’s called divergence trading.
In a nutshell, divergence can be seen by comparing price action and the movement of an indicator. It doesn’t really matter what indicator you use. You can use momentum indicators. The great thing about divergences is that you can use them as a leading indicator, and after some practice it’s not too difficult to spot.
When traded properly, you can be consistently profitable with divergences. The best thing about divergences is that you’re usually buying near the bottom or selling near the top. This makes the risk on your trades are very small relative to your potential reward.
Higher Highs and Lower Lows
Just think “higher highs” and “lower lows”.
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In a nutshell, divergence can be seen by comparing price action and the movement of an indicator. It doesn’t really matter what indicator you use. You can use momentum indicators. The great thing about divergences is that you can use them as a leading indicator, and after some practice it’s not too difficult to spot.
When traded properly, you can be consistently profitable with divergences. The best thing about divergences is that you’re usually buying near the bottom or selling near the top. This makes the risk on your trades are very small relative to your potential reward.
Higher Highs and Lower Lows
Just think “higher highs” and “lower lows”.
More details to our club members................
Learn fantastic way of technical analysis absolutely free and get daily recommendation free.
