MACD divergence on 28 November

[flyswatter77]

Originally Posted by SoundFX

Socrates,

You see, little ants like you and me can only use fundamentals AfTER they've done their work. But tehcnical analysis allows us to get an idea of what might happen, like a shadow on the ground rounding a street corner in the late day sun before the person responsible for said shadow is present. If I see the shadow move, I've got a decent idea of what's up.

OK, that was a weird analogy, but I'll stick with it.

-SFX

Nice analogy SFX. This thread has been a fun read. Never thought I would say that about MACD. lol Trader01, funny stuff and a lot of good practical insight. The first time I tried to trade a major news trade I felt like that one legged guy you mentioned. lol I agree with using MACD divergence along with other analytical tools in order to confirm an entry into the markets. Very useful in my experience.
Thanks again guys,
Michael

[Gdoss]

Hail to MACD Divergence. When you see it, play it. UNLESS, there is data looming. Fundamentals will blow up technicals, but technicals are how the market moves in between the data and news that's pertinant which is most of the time.

[haim1w]

Hi i am using the divergence on MACD,
if you would like to chat about it,
sent me an e-mail to:

haim1w@gmail.com

Haim Weinstein

Originally Posted by initialsBB

Is anyone on this forum using MACD divergence as trading strategy on 30M or 1H ?
On 28 November everyone predicted that USD would rise and EURUSD fall, but there was very apparent MACD divergence on 1H chart of EURUSD, and after that it rose for more than 200 pips. Many lost money on this day. What do you do when predictions from institutions such as UBS or Dresdner Bank contradicts what you see on the charts?

[cv6vb10]

Using MACD divergence (or any other indicator divergence for that matter ie. stochastic or RSI) at points other than solid support/resistance levels can be hazardous to one's account. In fact, I only pay attention to divergence when it is occuring at an area of overlapping support/resistance.

[birdjaguar]

For what it is worth in this discussion. Techinicals will often lead fundamentals. The trained eye will see a turn around in prices from overbought or oversold conditions before any news comes out to actually turn the prices around significantly. I am sure someone here can bear witness to this occurence. Happy trading.

[jrinvestors]

My 2 pennies:

My experience w/ divergence (not only MACD, but also RSI and Stoch) is that they work most of the time (very close to 100%). They may not work right away and the trade can go against you for a while, but eventually the cross will do what it had to do. That is why i use averaging, so if i am wrong about my entry, the following(s) contract(s) will make money for me.
I try to get divergence confirmation on the 3 indicators mentioned plus i also use the TS indicator and sprinkle a little bit of gut feeling of when to enter a position or the following(s) position(s).
Right now (11/28) i am short nzd/jpy due to a divergence on the 2 hr chart. I entered short at 83.75 and plan to keep shorting on the way up at around 30 to 40 pips intervals. Daily indicators tell me that the cross is well o/b and while it may continue on the way up for a while, the slope of the trendline is too steep and u guys know what happens with everything that goes up!
My take on TA and fundamental analysis is that I follow TA and confirm my suspicion with fundamental news.
Maybe that was more than 2 cents, but hope it helps
Richard

[SoundFX]

JRInvestors,

Glad to see a kindred spirit. I do the exact same thing but mostly with 30M and 10M charts. MACD divergence portends a trend change and while it may not come immedediately, it WILL come. The trick, as you stated is to build a position as the market moves against you. Course, you must be careful and properly funded to boot. The worst case scenario I've scene is that the market moves significantly past the point of divergence...howver, it almost always comes back at least to the intial point where the divergence occurred. Thus, having a built an averaged position as the market moved against you, you would still come out nicely ahead, though the initial entry was premature.

Trying to be too exact in trading is the downfall of many, I think, who try to time the market with pinpoint precision. I'd much rather have a 200 pip window of entry where a position can be built than a 1 pip window with a 25 pip stop.

-SFX

[fxmktlgc]

One idea of thought about is not entering an initial position until there is triple divergence (price hitting a higher high/lower low while MACD has a lower high/higher how for the third time). This doesn't happen as often, and still doesn't always work, but it seems like it would increase the success rate and give you a less risky initial entry point.

Originally Posted by SoundFX

JRInvestors,

Glad to see a kindred spirit. I do the exact same thing but mostly with 30M and 10M charts. MACD divergence portends a trend change and while it may not come immedediately, it WILL come. The trick, as you stated is to build a position as the market moves against you. Course, you must be careful and properly funded to boot. The worst case scenario I've scene is that the market moves significantly past the point of divergence...howver, it almost always comes back at least to the intial point where the divergence occurred. Thus, having a built an averaged position as the market moved against you, you would still come out nicely ahead, though the initial entry was premature.

Trying to be too exact in trading is the downfall of many, I think, who try to time the market with pinpoint precision. I'd much rather have a 200 pip window of entry where a position can be built than a 1 pip window with a 25 pip stop.

-SFX