📖Real-Time Divergences Confluence

Anticipate reversals and continuations, in real-time, using 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

TradingView: Real-Time Divergences Confluence with Strength Ratings; click image to enlarge

Menu Options

Menu: Real-Time Divergences Confluence

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.

The regular bearish [R-Bear 3] divergence does not extend to the next candle because there is no longer an active divergence on that particular candle; however, the trader still needs to pay attention to this information as the regular bearish divergence may re-emerge on a subsequent candle soon!

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

Regular Bearish Divergence [Real-Time, Not Confirmed]; click image to enlarge

• 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.

Always look for confluence with other indicators, chart patterns, or candlestick patterns.

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

Regular Bearish Divergence [Real-Time, Not Confirmed] followed by Shooting Star; click image to enlarge

• 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]

Regular Bearish Divergence [Real-Time, Not Confirmed]; click image to enlarge

• 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.

Most divergence indicators only flag once the divergence has been confirmed, which is too late, but the E5 Trading Real-Time Divergences Confluence System provides actionable early warnings along the way!

Example 5: Regular Bearish Divergence [Confirmed]

Regular Bearish Divergence [Confirmed]; click image to enlarge