Analysis

[oda.krell]

Can we play the divergence game again? As I said before, they still elude me quite a lot.

Your critique, please:



The biggest problem I see: In addition to what I drew into the chart, there are also /hidden/ divergences in there that would technically count as bearish, e.g. lower highs in price, higher lows in MACD = hidden (bearish) div.

How to rank them? hidden div > regular div, or vice versa?

[Miz4r]

I'm not so sure about those hidden bearish divergences, but I do see a hidden bullish divergence on the weekly chart:

[RyNinDaCleM]

Can we play the divergence game again? As I said before, they still elude me quite a lot.

Your critique, please:



The biggest problem I see: In addition to what I drew into the chart, there are also /hidden/ divergences in there that would technically count as bearish, e.g. lower highs in price, higher lows in MACD = hidden (bearish) div.

How to rank them? hidden div > regular div, or vice versa?

Your red in price and red on MACD is regular bullish divergence.
The green in price and green on the others two are hidden bearish

[adamstgBit]

you have official proven that price has been going down

such epiphany

[oda.krell]

Can we play the divergence game again? As I said before, they still elude me quite a lot.

Your critique, please:



The biggest problem I see: In addition to what I drew into the chart, there are also /hidden/ divergences in there that would technically count as bearish, e.g. lower highs in price, higher lows in MACD = hidden (bearish) div.

How to rank them? hidden div > regular div, or vice versa?

Your red in price and red on MACD is regular bullish divergence.
The green in price and green on the others two are hidden bearish

Thanks. You are right. And I even checked the 'cheat sheet' that was posted earlier in here.

I guess it's just so damn unintuitive to me... lower highs in price, higher highs in indicator seems to indicate a bullish div to me, intuitively at least.

But yeah, no point in arguing, I made the same mistake as last time :P

[oda.krell]

[...]

you have official proven that price has been going down

such epiphany

Thanks adam :D Never said my TA was beyond reproach. Guess divergences really aren't my cup of tea.

[Bitcoin_is_here_to_stay]

[...]

you have official proven that price has been going down

such epiphany

Thanks adam Never said my TA was beyond reproach. Guess divergences really aren't my cup of tea.

I am also not used to work with divergencies, but I would love pros to give their take. In Oda's example, there were two bullish divergencies and two hidden bearish. What is the interpretation? And generally, is there a simple answer to Oda's question of relative importance of regular vs hidden divergences?

[RyNinDaCleM]

Thanks. You are right. And I even checked the 'cheat sheet' that was posted earlier in here.

I guess it's just so damn unintuitive to me... lower highs in price, higher highs in indicator seems to indicate a bullish div to me, intuitively at least.

But yeah, no point in arguing, I made the same mistake as last time

How I look at the hidden bearish divergence is like this;
Market buying is stronger than market selling. This gives the boost to the underling indicators. But at the same time, the limit selling (aka ask order depth) was stronger than the market buying, which is why the price wasn't rising with the indicator.

In a regular divergence, you have price moving easier than the actual pressure applied to the orderbook.
This is why indicators make lower highs with higher highs in price (Bearish) or higher lows with the price making lower lows (bullish)

[oda.krell]

Thanks. You are right. And I even checked the 'cheat sheet' that was posted earlier in here.

I guess it's just so damn unintuitive to me... lower highs in price, higher highs in indicator seems to indicate a bullish div to me, intuitively at least.

But yeah, no point in arguing, I made the same mistake as last time

How I look at the hidden bearish divergence is like this;
Market buying is stronger than market selling. This gives the boost to the underling indicators. But at the same time, the limit selling (aka ask order depth) was stronger than the market buying, which is why the price wasn't rising with the indicator.

In a regular divergence, you have price moving easier than the actual pressure applied to the orderbook.
This is why indicators make lower highs with higher highs in price (Bearish) or higher lows with the price making lower lows (bullish)

Great answer. Screencapped and saved.

Thanks.

[Bitcoin_is_here_to_stay]

Thanks. You are right. And I even checked the 'cheat sheet' that was posted earlier in here.

I guess it's just so damn unintuitive to me... lower highs in price, higher highs in indicator seems to indicate a bullish div to me, intuitively at least.

But yeah, no point in arguing, I made the same mistake as last time

How I look at the hidden bearish divergence is like this;
Market buying is stronger than market selling. This gives the boost to the underling indicators. But at the same time, the limit selling (aka ask order depth) was stronger than the market buying, which is why the price wasn't rising with the indicator.

In a regular divergence, you have price moving easier than the actual pressure applied to the orderbook.
This is why indicators make lower highs with higher highs in price (Bearish) or higher lows with the price making lower lows (bullish)

Great answer. Screencapped and saved.

Thanks.

+1. Thx!

[N12]

Bearish divergence: Price does higher high, indicator does lower high
Hidden bearish divergence: Indicator does higher high, price does lower high

This isn't really a bearish divergence if the slope is just less negative. Plus, you drew it from different points in time for price vs. indicator.

Anyway, I checked it out on bitcoincharts, and there, the daily MACD actually does show a hidden bearish divergence, very strictly speaking (the slope is almost flat). Didn't catch that before, so thanks for that.

Maybe it will help engrave it if I explain it my way too: During a trend, you want the indicator (an indicator is nothing but a filtered/"interpreted" way to look at price history) to align with the price action to signal that the way the price moves doesn't change. And if you are looking at a bullish trend, you want to look at the highs because that's where the momentum is. If there's a divergence in the highs during the bullish trend, then something has probably changed, two views no longer align with each other.

A regular bearish divergence happens for instance when the price makes new highs, but then reverses sharply and retraces untypically little of the drop before candle close, or when the price takes longer to make new highs than before. For the hidden bearish divergence, it could happen when the price simply stops making new highs without a drastic drop while the indicator (MACD is a good example) still goes higher just based on a past moving average. Both is a loss of momentum, it's just that one of the two views is more receptive to some signals while the other filters them out.

This will all depend in detail how the indicator works; there are many variations. I only use the MACD and the RSI myself.

I wouldn't attribute divergences much importance if they happen on a low volume or relatively sideways market because there is just no trend to look at.

tl;dr:

Price goes up, you look at highs. Divergence = bad
Price goes down, you look at lows. Divergence = good

[sinner]

bump

[ampere9765]

Boy would I love to hear from masterluc. I remember in July 2013 his "special indicators" giving a strong buy signal ~ $65.... hmmmm....

[smilence]

Boy would I love to hear from masterluc. I remember in July 2013 his "special indicators" giving a strong buy signal ~ $65.... hmmmm....

"special indicators" means "Daily sma 200" I guess.

[ampere9765]

Boy would I love to hear from masterluc. I remember in July 2013 his "special indicators" giving a strong buy signal ~ $65.... hmmmm....

"special indicators" means "Daily sma 200" I guess.

That is not very likely, considering that we did not break the 200SMA until ~ 73 price level. Of course the best traders do not share their secretes.

[JustAnotherSheep]

Time for more divergence games! I'm still attempting to learn it, so I would appreciate clarification here.



Is this correct divergence analysis? As Oda asked in a similar case, which takes precedence, the hidden bullish or regular bearish?
Regular bearish because, as Blitz said (if I interpret his words correctly), in a bull market one should look more at highs, or the hidden bullish because it is more recent and thus more relevant to the situation at the moment?

[Miz4r]

Time for more divergence games! I'm still attempting to learn it, so I would appreciate clarification here.



Is this correct divergence analysis? As Oda asked in a similar case, which takes precedence, the hidden bullish or regular bearish?
Regular bearish because, as TERA said (if I interpret his words correctly), in a bull market one should look more at highs, or the hidden bullish because it is more recent and thus more relevant to the situation at the moment?

We're still in a short/medium term bear market, although it's showing some signs of reversal now. I would probably call this a bull market when the weekly MACD crosses again.

[windjc]

Time for more divergence games! I'm still attempting to learn it, so I would appreciate clarification here.



Is this correct divergence analysis? As Oda asked in a similar case, which takes precedence, the hidden bullish or regular bearish?
Regular bearish because, as Blitz said (if I interpret his words correctly), in a bull market one should look more at highs, or the hidden bullish because it is more recent and thus more relevant to the situation at the moment?

It's pretty obvious to me that we got some more up to go.

We ran up over $100 in just over 3 days. Now we are just profit taking at resistance levels before going up some more. If we make it to around $630, then we should start looking at divergences. Right now we are at the very least in an A,B,C correction and we've got some wind in our sails.

[JustAnotherSheep]

It's pretty obvious to me that we got some more up to go.

We ran up over $100 in just over 3 days. Now we are just profit taking at resistance levels before going up some more. If we make it to around $630, then we should start looking at divergences. Right now we are at the very least in an A,B,C correction and we've got some wind in our sails.

I am not as certain. We broke through short-term support pretty heavily, and are currently below hourly SMA50. I suppose the hidden bullish divergence could signal a final local spike up (possibly to the support-line (assumingly) gone resistance), but I have a feeling we'll break through hourly SMA200 and test long-term support (currently at $462) before we can break daily SMA200 and take off. Certainly doesn't help that it's weekend = whale dump time, and market looks fragile enough atm to be significantly moved by a whale.



But then again I'm a noobish sheep, so for all I know you could be right Just throwing out possibilities.

[windjc]

It's pretty obvious to me that we got some more up to go.

We ran up over $100 in just over 3 days. Now we are just profit taking at resistance levels before going up some more. If we make it to around $630, then we should start looking at divergences. Right now we are at the very least in an A,B,C correction and we've got some wind in our sails.

I am not as certain. We broke through short-term support pretty heavily, and are currently below hourly SMA50. I suppose the hidden bullish divergence could signal a final local spike up (possibly to the support-line (assumingly) gone resistance), but I have a feeling we'll break through hourly SMA200 and test long-term support (currently at $462) before we can break daily SMA200 and take off. Certainly doesn't help that it's weekend = whale dump time, and market looks fragile enough atm to be significantly moved by a whale.



But then again I'm a noobish sheep, so for all I know you could be right Just throwing out possibilities.

On Finex we have 6k coins to even touch $500. We've got about 36 hours of weekend left. I do not think we will see 460.