Magic for Ex Divergence

8/20/2019 Magic for Ex Divergence

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Tim Trush & Julie Lavrin

Introducing

MAGIC FOREX DIVERGENCETrading Guide

Your guide to financial freedom.

© Tim Trush, Julie Lavrin, T&J Profit Club, !"!, #ll rights reserved

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Table Of Contents

Chapter I: Divergene an! "ar#et ps$holog$

I%&% Tren! strength''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''('ur goal is to find the (oint $here the trend is so $ea) that it is (robabl going to reverse.

I%)% *hat is a !ivergene+'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''',*o$ to find the (attern that results in trend reversal.

I%(% In!iator so-p'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''.It doesn+t matter $hat indicator is our best friend.

Chapter II: The /0ol$ Grail1 strateg$

II%&% Chart set2-p''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''3et u( our chart.

II%)% Cath the "assive "ove''''''''''''''''''''''''''''''''''''''''''''''''''''''''''4

'ne sim(le e%it a((roach is sho$n in the ne%t e%am(les.II%(% E5a"ples''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''6The follo$ing charts are created $ith Divergence Pattern Recognizer . -ivergence can be used on an timeframe, an

currenc (air, stoc) or commodit.

Chapter III: 7"art approah ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''&)-ivergence (atterns can lead to consolidation, correction, or full trend reversal. /ith a solid strateg, ou can ma)e a 0uic)

(rofit on the small correction, or minor trend reversal.

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Chapter I: Divergene an! "ar#et ps$holog$

I%&% Tren! strength

Loo) at the follo$ing scheme.

". 1uers believe that the trend has recovered, or a ne$ trend has begun and the $ant to ma)e

mone. o the o(en long (ositions and drive the (rice higher. The trend accelerates as more

buers 2um( into the mar)et.. /hen the buers ta)e (rofits, the trend $ea)ens. 1uers still dominate, but the calm do$n

because the are afraid that the trend is coming to the end.

3. /hen there are no more buers in the mar)et, the trend is going to reverse. ellers dominate.

'ur goal is to find the (oint $here the trend is so $ea) that it is (robabl going to reverse.

# good tool hel(ing us to measure the character of the trend is the 4I indicator 5 Relative Strength Index6.

“When the RSI rises above !" the mar#et is considered to be overbought$ When the RSI %alls belo '!"

the mar#et is considered to be oversold$( This is a good old stor, but $e $ill use the 4I indicatoranother $a.

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I%)% *hat is a !ivergene+

7o$, loo) at the same chart again.

There are t$o significant highs labeled 8#9 and 819 in the (rice chart and the corres(onding highs in

the 4I chart. In the (rice chart, $e see that 1 is higher than #. That means that the (rice is still goingu(. In the 4I chart, it+s 2ust the o((osite: 1 is lo$er than #. It means that the trend $ea)ens and it is

(robabl going to reverse. #nd the trend has actuall reversed;

Let+s sa it again.

8earish Divergene 8-llish Divergene

● Price ma)es t$o significant

highs. The second is higher.● 4I ma)es t$o significant

highs, but the second is lo$er.

● Price ma)es t$o significant

lo$s. The second is lo$er.● 4I ma)es t$o significant

lo$s, but the second is higher.

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I%(% In!iator so-p

/e have used the 4I indicator in the e%am(les, but it can be re(laced $ith an momentum indicator

such as CCI, tochastic 'scillator or =#C-. #ll these indicators are derived from (rice so there are no

8better9 or 8$orse9 indicators. It+s onl about preferene. It doesn+t matter $hat indicator is our best

friend. >ver a((roach is e0uall good.

/e (refer the =#C- indicator because of its nice smooth diagram. The =#C- divergence is eas to

recogni?e directl from the =#C- chart.

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Chapter II: The /0ol$ Grail1 strateg$

II%&% Chart set2-p

#dd the =#C- indicator $ith default settings to the chart. /e recommend to hide the grid b (ressingCT4LAG.

*ere $e see a bearish divergence (attern. The t$o significant highs are connected $ith a red line. Theline in the (rice chart is slo(ing u(, but the line in the =#C- chart is slo(ing do$n. This is ho$

divergence is recogni?ed.

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II%)% Cath the "assive "ove

=#C- divergence is a ver reliable (attern. ometimes, 8chart (attern traders9 see the “double to)( (attern and 8>lliott $ave traders9 see the “shortened %i%th ave( instead. 1ut the all refer to the same

thing the divergence (attern.

=ost traders don+t reali?e that =#C- divergence is e%actl $hat the are loo)ing for; 'ur a((roachremoves the sub2ectivit because the divergence (attern is $ell defined.

There are numerous $as to catch the 0uic) move ha((ening after divergences. =ore details in the

-ivergence =aster Trader boo). 'ne sim(le a((roach to e%it is a candlestic) reversal (attern as sho$nin the ne%t e%am(les.

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II%(% E5a"ples

The follo$ing charts are created $ith -ivergence Pattern 4ecogni?er . The divergence (attern isrecogni?ed and automaticall mar)ed $ith blue line 5bullish divergence6 or red line 5bearish

divergence6 in both (rice chart and =#C- chart. The line connects the significant lo$s E highs.

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The last e5a"ple sho9s ho9 9e pre!ite! the big tren! reversal on G8;


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Chapter III: 7"art approah

# definite (lan about $here to enter, $here to (lace to( Loss and $here to e%it is needed. -ivergence

(atterns can lead to consolidation, correction, or full trend reversal. /ith a solid strateg, ou can ma)e

a 0uic) (rofit on the small correction, or minor trend reversal. /hen the trend reverses, ou should sta$ith the trend for as long as (ossible. You should also be able to filter small divergence (atterns in a

side$as or 8cho((9 mar)et. /hen the (rice is moving u( and do$n in the range, the =#C- is

moving around the ?ero line, giving too man invalid signals. The Golden 4ule e%(lained in the

Divergene Master Tra!er boo) (rotects us from such situations and limits the entr (oints onl tosignificant divergence (atterns. #ll features built in the Divergene attern Reogni@er hel(s the

trader to find reliable divergence (atterns automaticall.

The follo$ing e%am(le sho$s ta)ing a 0uic) (rofit on a candlestic) reversal (attern, or riding the ne$trend starting 2ust from the mar)et to(;

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Magic for Ex Divergence