New Feature: Automatic divergence detection in BullFilter v1.3!

BINANCE:ETHBTC   Ethereum / Bitcoin
With the upcoming imminent release of BullFilter 1.3 to our subscribers I wanted to highlight the new features in a series of ideas.

In trading, divergence is a concept that forms on your chart and results from the price action of a security moving in opposite direction to the indicator value.

What you need to know is that positive ( bullish ) divergence happens only when the securities price shifts lower while the indicator starts to rise. This indicates a weakness in the downtrend.

On the other hand, negative ( bearish ) divergence occurs when the securities price rises to a new high while the indicator fails to achieve the same momentum. This indicates a weakness in the uptrend.

Now since this is an automated detection, it may not signal the divergence for its entire length. You can also spot/chart divergences manually by drawing trend lines on price action and bullfillter values.
Then comparing the bullfilter value trend lines against the price trend lines to see if they diverge. An example of that is shown here

These divergences also go hand in hand with our other premier indicator They can be used to filter out a potential long entry. I.e. do not long if a bearish divergence is present, and vice versa do not short if a bullish divergence is present.

To use this in your trading strategy, a short when bearish divergence begins/long when bullish divergence begins. The second divergence in a row is usually more accurate for a larger move. If entering a trade off the first divergence its recommended to exit it quickly and take profit.

The higher the timeframe you are on the more weight the divergence has. On sub 30m timeframes they are not particularly useful, and may signal too often or without effect.
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