%%%%%%%%%%%%%%%%%%%%%%%%% Agreed; and that doesnt change his points, more than one way to use a moving average indicator.................................................
Price and indicators can diverge ... and then keep on moving in the same direction. What then? Or in other words how can you tell this divergence is "the one" to pay attention to?
IMHO: This is a grey area, where experience and screen time would count. For example, if there is a three-push reversal pattern confirmed by price-momentum and price-volume double divergence on the five-minute chart of ES, under normal circumstances I would look for reversal signal immediately, since ES is a mean-reverting market. The basic assumption is that I trust the momentum indicator producing the divergence signal. What would a trader do, if a) the volume divergence is missing ? b) the above divergence pattern occurs on the five-minute chart of gold futures (GC), a running market ? c) The above divergence pattern occurs five minutes before the announcement of the Fed Fund Rate or release of the monthly job report ? I guess it all depends on the personality of the trading instrument, time of the day, confluence with other indicators, confluence with psychological levels, support or resistance, time-frame of the divergence signals, etc.
Indicators derived from price always lag. Volume is a coincident indicator. As far as predictive indicators go, the only ones that might qualify are order flow and sentiment.
I like TRO, he's a character. To answer his question, the indicator is a measure of the current price in the context of historical price. When you change the lookback period of historical price (i.e., change the time frame), the measure changes accordingly. Just that simple.