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

  1. Bearish Divergence on H4 Stochastic
  2. Bearish Divergence on H1 Stochastic
  3. Bearish Divergence on H1 MACD

 

2015-09-11_12-28-51-GJ1

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.

2015-09-11_12-33-38-GJ2

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.

  1. 187.00 (Previous High, on Aug 31)
  2. 187.58 (Weekly M4)
  3. 187.86 (Kijun Line of Daily Ichimoku) … See below
  4. 188.17 (Monthly Central Pivot)

 

2015-09-11_12-40-38-GJ3

 

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.

 

Happy Tradin’

 

 

YJ Baik – Forex.Today @ Tokyo

 

 

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.