Hidden divergence occurs when the oscillator makes a better high or low while the worth action does not. This often tends to occur within an existing trend and typically indicates that there is still strength within the prevailing trend which the trend will resume. In other words, hidden divergence is like a continuation pattern. As with regular divergence, hidden divergence are often bullish or bearish.
The Hidden Divergence Module Includes five superb Trading Strategies, each designed to find optimal entries in an established upward trending market. Each Strategy uses a special Momentum Indicator to seek out concurrent pivot divergence relative to cost .
- Balance of Power
- De-trended Price
- Rate of Change
- Relative Strength
The slight differences in each indicator assures us that we are finding all of the simplest hidden divergence trades within the current market.
Bearish Hidden Divergence occurs during a reaction in a down trend when the oscillator makes a lower low while the price action does not as it is in a reaction or consolidation phase. This indicates that the selling has not waned and that that down trend is still strong.
Divergences not only signal a potential trend reversal, but they can also be used as a possible sign for a trend continuation (price continues to move in its current direction). Hidden bullish divergence happens when price is making a better low (HL), but the oscillator is showing a lower low (LL).