The Regular Divergence vs The Hidden Divergence (2)

  

 

For a bearish bias, regular divergence is price higher high, but hidden divergence is price lower high.

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. As what written in last blog, it is less sensative than stochastic indicator.
  
• For 4 hour chart, use 7 as RSI parameter should be relatively proper.
  
• For a bearish bias, for regular divergence, price is higher high, but indicator is lower high. For hidden divergence, price is lower high, but indicator is higher high.
• How to remember? As what written in last blog, regular and hidden divergence both compare the same spots.
• How to remember? For a bearish bias, no matter it is regular or hidden divergence, price and indicator both compare highs.
• Once again, regular divergence will reverse the trend, but hidden divergence will continue the trend.
  

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