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TOPIC: Bearish Divergence
#105
Deon (User)
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Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Hi All,

Id like to find out if anyone here has utilized bearish divergences into their trading plan as a means of cutting losses earlier than you otherwise would. Ive noticed that 2 trades recently both had bearish divergences and ended up hitting the SL. Fortunately i was only in one of them

I dont intend utilizing them even if they are utilized by others , as i would test them first, specifically on the losing trades from my backtesting. And i dont want to lose the plot in my first year. QBE was one that had a Bearish divergence and ended up breaking out

IVC and DJS were two that had bearish divergence and had flags. If anyone can spot a reason why they would not consider these two flags , id love to know for learning purposes. Although i wasnt convinced by djs has it did not have a good run up to break out. Below is IVC chart.

TIA
Deon

Post edited by: Deon, at: 2006/11/13 11:29<br><br>Post edited by: Deon, at: 2006/11/13 11:30
 
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#107
Charlie (User)
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Re:Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Hey Deon,
Have a look at your Daily chart and what do you think about volume during breakout?
Also, for DJS what did you use as confirmation?

Charlie
 
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#108
Deon (User)
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Re:Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Gday Charlie,

For DJS, i did not use any indicator for confirmation, I wasnt satisfied with run up to breakout and thus did not trade it. If you compare this with IVC, you'll find that there were 3 or 4 blue days prior to break out with considerable volume, i traded it, and it stinked!

At this stage i dont use any indicator at all, ive been doing backtesting using indicators as confirmation and im getting mixed results, when i review my testing ill be able to make a more informed decision. I do however believe that the cci can be used or the rsi. At this stage im only using volume and price action for patterns only and have had probability of 77% to date (paper trades and live combined) and like the macd for frl.

Hows your trading going?
Btw , its my first year, so take what i say lightly

Good trading,
Deon
 
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#109
Charlie (User)
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Re:Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Mate, seems you're doing well.
I think with experience you can do without the indicators and just use volume and price action, so you seem to be on the right track. With 77% you doing pretty darn good.
Not sure about that being considerable volume..........maybe someone can give us a guide to what sort of volume we should be looking for??? % gain on previous days or down days??????????
I use CCI myself as confirmation as the RSI has never kept me out of a trade.

Charlie
 
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#110
rob (Admin)
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Re:Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Bearish divergance can be a fantastic signal near the top of a market ... only real issue is to determine what indicators provide the most reliable and reproducable signals. In last issue of &quot;In a Nutshell&quot; you may have picked up a few ideas of some indicators on which divergence really &quot;rocks&quot;.
It was the reliability of divergences that swung me around to a huge respect for the CCI.

cheers
 
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#112
Deon (User)
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Re:Bearish Divergence 5 Years, 2 Months ago Karma: 0  
Thanks for replying Rob,

I was trying to figure out reasons why those particular trades did not work. While i know im still playing with probabilities, its good to know if for some reason the intial interpretation was not as good as it could have been. Hence the only real reason or commmon reason that i could find was a bearish divergence, RIN was similar for a short back a few weeks ago. Displayed a bullish divergence on the CCI just prior to break out of a flag in a falling market and ended up hitting the SL soon later.

Do you utilize bullish/bearish divergences at all , or are they more of an analyst tool.

Thanks
Deon
Attached is rin below: <br><br>Post edited by: Deon, at: 2006/11/16 09:22
 
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