I am a big fan of Divergences.
When I check for the charts, I always check
a) Supports & Resistances
b) 21 / 55 EMAs (angle and separation)
c) Divergences (on Stochastic, MACD)
Today, I see 3 different divergences for GBPJPY pair. This GBPJPY short trade plan started from such divergences, that are
- Bearish Divergence on H4 Stochastic
- Bearish Divergence on H1 Stochastic
- Bearish Divergence on H1 MACD
The above is H4 chart, and you see the divergence on Stochastic.
Here is H1 chart, and there are 2 divergences on Stochastic and MACD.
OK, the direction has been set. Sell !
Unlike Price Actions such as Double Top, or Head and Shoulder, it is hard to identify from where to sell only based on Divergences.
Let’s get back to H4 chart. I measured Fibonacci of the big sell-off started from Aug 18th until Sep 7th. I can easily say “Let’s sell from somewhere between 38.2% – 61.8%”.
But hey, this is the Beast.
38.2% is 186.00, and 61.8% is 189.60. Yes, over 300 pips difference!
So I have listed more immediate possibilities as possible resistances.
- 187.00 (Previous High, on Aug 31)
- 187.58 (Weekly M4)
- 187.86 (Kijun Line of Daily Ichimoku) … See below
- 188.17 (Monthly Central Pivot)
We may have to wait for the long time to see the actual drop. But I think it is worth the wait, as it is rare to find the divergences on H4 and H1 at the same time.
YJ Baik – Forex.Today @ Tokyo