The Regular Divergence vs The Hidden Divergence (1)

 

 

For a bullish bias, regular divergence is price lower low, but hidden divergence is price higher low.

Tips: 

• This is forex, not a stock. But the tips should apply as well.
• The left arrows are regular divergence. The right arrows are hidden divergence.
  
• This is a 4 hour chart, using RSI as indicator.
  
• RSI is similar to stochastic, but less sensative. Means RSI also values stock momentum, but the overbought and oversold readings are less than stochastic.
  
• For 4 hour chart, use 7 as RSI parameter should be relatively proper.
  
• For a bullish bias, for regular divergence, price is lower low, but indicator is higher low. For hidden divergence, price is higher low, but indicator is lower low.
• How to remember? No matter it is regular or hidden divergence, price and indicator compare the same spot. Means either compare both lows, or compare both highs.
• How to remember? For a bullish bias, no matter it is regular or hidden divergence, price and indicator both compare lows.
• Once again, regular divergence will reverse the trend, but hidden divergence will continue the trend.
  

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