Hey guys…this will be the last part on the forex trading tutorials on divergence trading. If you have missed the blog post since part 1, then you can start reading it HERE. After the examples on hidden and regular divergence, are you more familiar and comfortable with trading divergence now? Perhaps you can use it by combining with your forex trading system as well, and you will see how powerful the forex strategy is. So today I’m going to guide you on how to trade forex divergence the proper way and last but not least, the summary for this 4 part tutorials.

Divergence acts as a warning signal on whether the forex market could reverse or continue on the trend. You can say it’s something like price action because it is more leading than the forex indicators. Before the indicators can show you something, divergence can already give you a forex signal. However, please take note that divergence is used as a signal as an indicator, not a signal to enter a trade. It’s not a holy grail and you should combine it with a forex trading system to make trading a very low risk with high winning probablities. Using divergence with a longer timeframe like H4 or above will increase the probability of winning and reduce the risk. One more thing is that, if you solely trade based on divergence, chances are you wouldn’t spot it too often. But if you spot a good one (after practicing), they can fetch some nice profits.

Here’s the rules on how you trade divergence :

1. For divergence to occur, the price must have formed patterns like the 4 scenarios of the previous posts. Do not imagine one if the market is choppy and doesn’t fulfill higher highs, lower lows etc.

2. If you draw lines connecting two highs on the price, make sure the two highs are connecting on the indicator as well. Same for lows. In any case, they have to match.

3. The highs and lows that you identified on the price must lined up vertically with the forex indicators’ highs or lows.

4. Divergence occurs only when the slope connecting the price highs/lows are different from the slope connecting the indicators’ highs/lows.

5. If you spot divergence after some time the price has reversed, then that means you have missed the boat and should wait for another opportunity. You should not chased after it.

That’s all for this 4 part forex trading tutorials and I hope you have benefited from something here. Remember, practice makes perfect and one day you can be sure you will spot divergence easily.

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Friends, we are back here again. After the post on regular divergence that day, do you have any doubts or forex trading questions that you want to ask me? If you have, please leave me a comment at the end of this post and I’ll reply you. So today, we’ll be continuing on part 3 of this forex trading tutorials with the topics on hidden divergence. I have received some emails these few days saying that regular divergence is not difficult to identify, but it’s hidden divergence that is tough. Well, if you ask me, I would rather say identifying regular divergence is easier than hidden divergence, not because it’s really easier, but just that I happen to find more regular divergence, that’s all

Hidden Divergence is often used or understood as a possible trend continuation. Below are the 2 examples for it and try to combine it with your own forex trading system, I’m sure it will spark fireworks

Hidden Divergence Example 1

From the above forex chart, I’m showing you the first example of the hidden divergence. If the price of the currency pair, in this case is AUD/USD, using daily timeframe, is making higher lows, but the Moving Average Convergence Divergence (MACD) is making lower lows, it means that it’s a hidden bullish divergence. As from the chart, you can see that the price continued with the trend after the divergence took place.

Hidden Divergence Example 2

In this forex chart example, the MACD may seems to be a bit far from each other, but it’s still a valid hidden divergence. If the price of the currency pair, in this case is USD/JPY, using daily timeframe, is making lower highs, but the MACD is making higher highs, then it is a hidden bearish divergence. The price went along with the direction of the trend as the hidden divergence again suggest the possible trend contiuation.

Yay…you have learnt the 2 types of divergence and that’s the regular and hidden. So it’s still not too tedious right? I’m sure you can cope with that For the next and last post of this 4-part forex trading tutorials, I will be posting on how you can trade forex divergence. Of course you should have got the idea by now after studying the above forex charts, but I will elaborate more on that and do a summary on divergence. Have a nice day!

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Hey guys, today I’m going to show you how to identify the pattern for regular divergence in this forex trading tutorials and we’ll leave the hidden divergence for the next post. Although divergence trading is not mentioned in my ebook or used in my forex trading system, but I’ll give you continued education in my blog, so please visit my forex blog for more tips and education Regular Divergence is often used or understood as a possible trend reversal. Alright, below are the 2 examples for it and let me know if you have any questions regards to that.

Regular Divergence Example 1

From the above forex chart, I’m showing you the first example of a regular divergence. If the price of the currency pair, in this case is EUR/USD, using 4 hourly timeframe, is making lower lows, but the Moving Average Convergence Divergence (MACD) is making higher lows, this means that it’s a bullish divergence. As from the chart, you can see that the price went right up after the divergence took place.

Regular Divergence Example 2

For the forex chart in example 2, it’s also a regular divergence, but this time the direction is the opposite way. If the price of the currency pair, in this case is GBP/USD, using 4 hourly timeframe, is making higher highs, but the Moving Average Convergence Divergence (MACD) is making lower high, this is considered as a bearish divergence. Again, you can see that the price went down after the divergence took place. This forex strategy is easy to identified if you give it more practice. We’ll continue with hidden divergence for the next posts. Stay tune

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Hey guys, most people will trade forex using traditional forex trading systems and keep looking for one that is close to a holy grail. Are you doing the same too? I mean it’s alright to have your own trading system and it’s good that you follow the rules and stick to it. For my Pips Mover™ trading system, it’s also a mechanical system which can make real profits and many of my members who are using it are satisfied with the performance. But now I’m introducing you a method called divergence trading. For experienced traders, this method is definitely not a new stuff to them, but for new traders, you can learn how to trade forex with a wider perspective using divergence and below are the forex trading tutorials to it.

So what exactly is divergence in forex trading? It’s basically a price action measured in relationship to a forex indicator. I use MACD in my charts to detect divergence, but in fact there are no hard and fast rules to which indicators you are using. You can also use oscillators like Stochastic, RSI (Relative Strength Index), trend indicators like CCI (Commodity Channel Index) etc. We all know that forex indicators are always lagging but price is king because they are leading indicators. In divergence trading, it’s something like price action because you can use it as a leading indicator. You can master this forex strategy after some practicing as practice makes perfect.

When divergence is used properly in forex trading, you can profit from the method consistently too. It is a lower risk to sell near the top and near the bottom of a trend because the risks are relative smaller to the potential reward. So what’s your thinking when a currency pair is making higher highs and lower lows? It will mean the price can go even higher or lower right? So when the price is making higher highs and lower lows, we expect the indicators to follow suit. If they are NOT, then the price and the indicator, in this case the MACD, are diverging from each other and will mean that the forex market may reverse. Again, the method works better on higher timeframe like H4 or higher.

There are two types of divergence which are

1. Regular and
2. Hidden

We will stop here for this forex trading tutorial and for the next few blog posts, I will show you some examples of live forex trading charts which divergence can be used on. So visit my blog again for the next few days to learn forex using proper divergence trading. If you have not got my forex trading system, please download it at the top and you can get also access to my fr.ee weekly newsletter, forex trading tips and other resources.

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