YaseenG.Housari
Education

Another way to use "Divergence" to spot Fakeout from Breakout

FX:AUDNZD   Australian Dollar / New Zealand Dollar
-is to find out if the momentum is getting stronger or weaker, if the chart make a higher high and the indicator made lower high so it refer to; the momentum is decreasing, in order to spot the (breakout from fakeout)
-in this example we have a rectangle consolidation, you can see the first breakout was a fake out, here we'll use divergence to spot this fake out take a look at the indicator is making higher low while the price get back to same low this indicate the momentum is decreasing, the bears are already exhausted and the price get back to rectangle pattern.
-But the next one was a real breakout look at the indicator is making lower low just like the price, also if you look what just happened next the price soar up to reach the support line of the rectangle pattern which is turned to resistance, the bears gathers more steam to push the price down
-Hopefully this was helpful and another tool to put it in your arsenal facing the market wish y'all a green week, Peace.
But what is the concrete trading advice for both situations?
in both situations it would have been good to go long at the second low of the RSI trend.

Best regards,
Josef
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Nice one! Thanks man
+1 Reply
@Bidant,you're most welcome
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