EMA-STOCHASTIC OSCILLATOR “Multiple Time Frames” Hidden Divergence Trading

I want to discuss what I believe is the most effective approach to trading.

From my personal experience, this has proven to be the simplest and most consistent method for maintaining profitability over time.

When analyzing the chart, the ideal time to enter a short position would be at each of these peaks.

Conversely, in an uptrend, the optimal entry point for a long position would be at the bottom of each dip, anticipating a continuation of the trend.

Hidden divergence occurs when the price forms a lower high, but simultaneously, an indicator forms a higher high.

We can see an example of hidden divergence here:

During this pullback, the Stochastic Oscillator rises to this level, but on the subsequent pullback, the Stochastic Oscillator climbs even higher. It has already fully reset into the overbought territory while the price forms a lower high.

In such cases, we can discuss the concept of hidden divergence and wait for our indicator to fully reset into overbought territory in a downtrend, or oversold territory in an uptrend.

Adding this ‘STOCHASTIC OSCILLATOR’ layer provides confirmation that the price has likely retraced enough and is poised to continue, helping to avoid entering the trend prematurely and potentially being stopped out. Naturally, some trades will incur losses, which is part of any trading strategy, but our aim is to minimize these by entering at optimal points.

So, hidden divergence occurs when the price forms a lower high, but simultaneously, an indicator forms a lower low. or when the price forms a higher low, but simultaneously, an indicator forms a higher high.

 

We can see an example of hidden bullish divergence here:

The price has recently reached a clear higher high, while the Stochastic Oscillator simultaneously recorded a higher low within oversold territory.

This Hidden Divergence analysis suggests that the market may be sufficiently satisfied to initiate a correction, presenting an opportunity to enter at a discounted price before resuming its bullish trend.

Professional traders consider this method among the best and safest ways to avoid entering a trend prematurely, which could result in being stopped out. While losses are inevitable in trading, the goal is to minimize them by entering at optimal discounted price levels.

Furthermore, this scenario applies when the price is in a bearish trend. Our objective is to ensure the trend is poised to continue and that the market has identified its premium price point. So, Let’s delve into this further.

• Download “TraderVersity-MTFdivergenceSystem” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-MTFdivergenceSystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-MTFdivergenceSystem” trading system and strategy.
• You will see the “TraderVersity-MTFdivergenceSystem” is available on your Chart.

Finally, while this is a highly effective and reliable strategy, there’s no guarantee that the trading signals generated will be 100% accurate because no human, institution, or tool can predict exactly where the market will move.

Everything is based on probability. Therefore, no strategy can promise 100% profitability all the time. That’s why it’s important to always implement stop-loss orders to protect your funds.

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By combining these customized settings for the RSI and CCI, traders can gain a better understanding of market conditions and make more informed trading decisions.

To enter a long position or make a buy, traders should look for the RSI reading to be above 50. This indicates that there is upward momentum in the price of the security, suggesting a good opportunity to consider long positions.

The CCI indicator can be used to generate specific buy signals. For a long position, watch for the 20-period CCI indicator to cross above -100 from below. When this crossover happens, it’s a strong signal to enter a long position.

To manage risk, place a stop-loss a few pips below the entry point. A good risk-reward ratio for this strategy is anything greater than 1:3, ensuring that potential rewards outweigh the risks.

By combining these signals from the RSI and CCI indicators, traders can make more informed decisions about when to enter long positions.

To open a short position using the RSI and CCI indicators, look for the RSI to be below the 50 line. This indicates a bearish trend, suggesting that the price is likely to continue falling.

Traders should focus on short positions in this scenario. The signal to enter a short position occurs when the 20-period CCI indicator crosses below +100 from above. When this crossover happens, it indicates a good opportunity to enter a short position.

To manage risk, place a stop-loss a few pips above the entry point.

• Download “TraderVersity-RSICCItrading” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-RSICCItrading.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-RSICCItrading” trading system and strategy.
• You will see the “TraderVersity-RSICCItrading” is available on your Chart.

From these examples, you can see that combining the RSI and CCI strategies with the right settings can provide highly accurate trading signals and offer substantial profits with relatively low risk. You can test this yourself in forex, stocks, or cryptocurrencies to verify its effectiveness.

This approach leverages the strengths of both indicators to help you make informed trading decisions, maximizing potential gains while minimizing potential losses.

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Simple and high accuracy “Forex Cynthia Signal Trading System” – Of course, not every trade will be profitable, there is no holy grail in Forex.

Losing trades will be closed by your trailing stop loss automatically but by the end of the month, a good profit is sure to be yours.

• Time Frame: H4 or higher
• Currency Pairs: Any

• Cynthia’s Signal Entry Stop
• Cynthia’s Signal Hot Dots
• Cynthia’s Trend Bars
• Bid-Ask Big Price
• Trend Slope
• BBand Stop
• Cynthia’s  i Trend
• RSI

• Cynthia’s Signal Entry Stop: Aqua color
• Cynthia’s Signal Hot Dots: Blue color
• Cynthia’s Trend Bars: Green color
• Trend Slope: Aqua color
• BBand Stop: Aqua color
• Cynthia’s  i Trend: Green line > Purple line
• RSI: Above the level 55 line

• Cynthia’s Signal Entry Stop: Magenta color
• Cynthia’s Signal Hot Dots: Red color
• Cynthia’s Trend Bars: Magenta color
• Trend Slope: Magenta color
• BBand Stop: Magenta color
• Cynthia’s  i Trend: Green line < Purple line
• RSI: Below the level 45 line

DOWNLOAD TRADING SYSTEM