Divergences

Hi there,

Just curious as to if this divergence thats been setting up since July might have some merit as it did going from Fed to May....

 

Pardon me for asking but why should divergences work ?

Is it simply because, it is a pattern that is observed to work ?
IF it is, then it would probably be simple to do a historical backtest to objectively confirm this.

Else is there any other reasons why it should work ?

thanks

 

When its testing the high like this I would not go short unless PRICE gives me a reason.

 

You need more than this. You also had a sto divergence from July to August which meant nothing. Plus your MACD histogram "divergence" is not a divergence. The bars are getting smaller because the distance between the MACD lines is narrowing. This is consistent with a steady uptrend.

LC

 

Interesting...I'll do more studying on it, as I'm fairly new to thinking about divergences.

Thanks
Chris