📖Real-Time Divergences Confluence

Overview

• The most valuable divergences tool on the market!

• Divergences occur when a technical indicator, like an oscillator, moves in the opposite direction of the price.

• They often serve as an early warning of a trend reversal [via regular divergence signals] or trend continuation [via hidden divergence signals].

• E5 Trading divergences flag in real-time directly on the price chart

• Bullish divergences flag below the price action, and bearish divergences flag above the price action to help traders detect potential trend reversals [regular divergences] or trend continuations [hidden divergences] before they happen.

Divergences Strength Ratings

• This indicator evaluates six [6] oscillators simultaneously to identify divergences compared to price action.

• Each divergence is assigned a strength rating [1 to 6] based on the number of oscillators that simultaneously detect a divergence.

• Twelve [12] separate oscillators were initially evaluated for inclusion in the Real-Time Divergences Confluence system.

• Based on extensive backtesting over multiple timeframes and assets, only six [6] oscillators met E5 Trading's reliability threshold for use in our discretionary trading system.

Real-Time Divergences Plots

• The real-time nature of the divergences will cause the divergence line to re-plot with each successive candle until the divergence confirms at the end of the trend.

• The divergence strength rating will also continuously update with each successive candle based on the number of divergences detected at that time.

• When the divergence confirms, the divergence line and label on the chart will update from a lighter/transparent shade to a darker/opaque shade.

• Use the color selector to change label and line colors.

• Use the line selector to change the line style. Default [Solid Line].

• Use the "Show Divergences Lines" checkbox to toggle the divergences lines on and off. Default [Off].

Example 1: Real-Time Divergences Confluence with Strength Ratings

Menu Options

Regular Div [Divergences]

• Change bull and bear Regular Divergences line colors, labels, and style.

Hidden Div [Divergences]

• Change bull and bear Hidden Divergences line colors, labels, and style.

Regular Div [Bull] | Hidden Div [Bull]

• Toggle [Regular Div [Bull]] to display bullish regular divergences. Default [Off].

• Toggle [Hidden Div [Bull]] to display bullish hidden divergences. Default [Off].

Regular Div [Bear] | Hidden Div [Bear]

• Toggle [Regular Div [Bear]] to display bearish regular divergences. Default [Off].

• Toggle [Hidden Div [Bear]] to display bearish hidden divergences. Default [Off].

Show Divergences Lines

• Toggle [Show Divergences Lines] to display lines connecting the beginning and end of each divergence. Note: Divergence selector toggle[s] must be checked for divergences lines to plot. Default [Off].

Example: Real-Time Divergences Confluence

Reference the chart and explanation below as an example of how the real-time divergences confluence system operates.

• A regular bearish divergence [not confirmed] has flagged after a substantial bull run, providing a leading indicator of an impending potential reversal.

• The divergence indicates a strength rating of three [3], which means that the price is diverging with three [3] of six [6] oscillators included in the E5 Trading divergences confluence system.

• A trader might consider using this signal as an opportunity to exit a LONG position or wait to see if the divergence continues.

• The regular-bear divergence [non-confirmed] recalculates [real-time] on the new candle immediately following the regular bearish divergence signal on the chart.

Example 2: Regular Bearish Divergence [Real-Time, Not Confirmed]

• During these scenarios where the divergence does not update, the trader should consider price action as additional confluence or denial of the trend.

• For example, in the next figure, the divergence still does not extend with advancing price action since the specific conditions required for a divergence to flag are not met.

• A shooting star forms and provides a warning that the bullish trend may be slowing, and the bears may be coming into control.

• If the trader had stayed in the trade to this point, then now might be a good time to exit the trade and take profit. It may also be an opportune time to enter a SHORT position in anticipation of the divergence confirming.

Example 3: Regular Bearish Divergence [Real-Time, Not Confirmed] followed by Shooting Star

• In the next figure, the regular bearish divergence, still with a strength rating of three [3], emerges on the candle after the shooting star, increasing the probability of a bearish reversal of the trend.

Example 4: Regular Bearish Divergence [Real-Time, Not Confirmed]

• In the next figure, price action takes a hard nosedive, as predicted by the bearish divergence and tell-tale signs of buyer exhaustion [i.e., shooting star] after a substantial advance.

• A few candles later, the regular bearish divergence has formally confirmed, as indicated by the solid label color.

Example 5: Regular Bearish Divergence [Confirmed]