Top 10 trading rules of Divergence

Top 10 trading rules of Divergence 

Rule 1

• Divergence can be plot only when stock follow these rules.
• Stock should make higher high than previous high
• Lower lows than previous low
• Double top
• Double Bottom

Rule 2

• Set time frame to daily or weekly

Rule 3

• Use RSI Indicator for analysis

Rule 4

• Connect Previous high and new high using line tool
• Select RSI Indicator set it to daily time frame
• Connect RSI Previous high and new high using line tool
• If you find the difference between them is a hidden divergence

Rule 5

• Connect Previous low and new low using line tool
• Select RSI Indicator set it to daily time frame
• Connect RSI  Previous low and new low
• If you find the difference between them is a hidden divergence

Rule 6

• Divergence can be identified using different indicators like MACD or stochastic.

Rule 7

• Divergence Trading is only successful for longer time frame min 1 hr.

Rule 8

• You should enter the trade at the bottom or at the top.

Rule 9

• When you identify double top or bottom check the divergence to confirm the trade

Rule 10

• Divergence works only in stock price make slop means stock should either be in uptrend or downtrend it does not work in sideways or consolidating stock