FullTimeTrader
Short

USDCAD-convergence-divergence-how to trade it(educational)

FX:USDCAD   U.S. Dollar/Canadian Dollar
1835 21 34
Hello, today i wan to share with the community this trading system called "convergence-divergence".
I use it very often because it gives a Risk/Reward ratio at least 1:2 and is simple, we use just price action and an oscillator as confirmation.
Price always moves from convergence to divergence. Most of us uses divergence but the combination of convergence and divergence is also powerful.

The USDCAD             now is a good opportunity to apply this system. Especially now because its tricky to find an entry point (according to my long term analysis this pair reached a top).

The systems as follows:

1) We find a clear uptrend on price action, a series of HH, HL. We can use a trendline also as a visual tool.
2) Price breaks the uptrend and forms the first Lower Low.
3) We can use an oscillator for confirmation ( MACD , stochastics, AO). We mark this level because price usually reaches it and will be the First Target.

After that we switch to a lower timeframe (in this case H4)

snapshot

We identify a divergence is already in play and confirm it on oscillator.
The confirmation is the first red candle, this would be our first entry.
We find TWO additional levels of S/R, not too far and not too close.
This will be our "extra" entries just in case price reaches that levels.
SL above last level of S/R, the third one.
First target D1 level of convergence.

As you can see this system gives a very good R/R ratio because price usually reaches the D1 level of convergence and often exceedes it.

Advanced management recommended for advanced users: not to use SL to avoid beeing spiked out (i dont use it)

This is a good opportunity to test this system real-time on USDCAD             .

Best regards.








Thanks for sharing techniques and simplicity
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Great Work! I will ask my students to watch this idea
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Great! Ths for sharing!
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Nice, the last leg down can be a wave 4, and now a wave 5 in progress
to close the wave 5
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Hello, i know some traders have that count, i respect it. From MY point of view an according to my long term analysis this pair already reached a top. The market will tell. best regards.
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NidalDarawsheh FullTimeTrader
agree that it reached its top
snapshot
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FullTimeTrader NidalDarawsheh
Hello, thanks for sharing, i have the same count. Regards.
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Thanks for the post! Nice, clear analysis
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Brilliant that you've posted this in real time. Fantastic. A couple of questions:
1. I'm curious about your entry. You say the confirmation is the 1st red candle. Do you enter upon its completion on the H4 or? It appears you're in earlier.
2. How much leeway do you recommend for your stop? Again just curious. Always good to pick other people's brains.
3. The lower low which is now the target is at 1.2831 on my chart. You've got 1,2846. Have you raised it a bit or do our charts really differ this much?

Cheers.
Reply
Hello,
1)the confirmation is the first red candle. Sometimes off course i post the chart on tradingview later or sooner because im busy managing my real account.
2)since we are trading the 4H chart i reconmend 40-50 pips
3) the target is D1 lower low or near that area (nothing is exact in trading). This is a quick chart so im not picking exact levels .

Best regards.
Reply
OdoFx FullTimeTrader
hello,
it is hard to find / identify confirmed divergence in play (but of course in backtest we always find divergences). as good confirmation should be confirmed divergence near S/R levels.
could you explain please why you didnt enter the market on divergence i marked ?
thanks!
Reply
OdoFx OdoFx
it didnt insert my chart. i am sorry but dont know how to insert it. but i marked only 1.3155 & 1.3193 as first divergence but it is not on your chart
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OdoFx OdoFx
https://www.tradingview.com/chart/UrXmKTe8/
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Hello, very good question. You are right, you have also a divergence that appeared before. You could also entered there and marked three levels of S/R above it, etc. You can see in this strategy THE DEEPER THE BETTER, personally i prerer at least a pullback to the 0.61 fib or more. This gives us a better Risk Reward ratio.See below.
snapshot
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OdoFx FullTimeTrader
hello, thanks for your explanation!
i stepped there around 1.3197 as there was a divergence and also WR what i considered as strong level. but after 30 pips i moved SL to BE so no loss.
my second entry (also yours), WR + monthly pivot, wasnt hit by few pips as my entry was 161.8 ABC extension what stands only 5 pips above current top
so here is my question again :)
do you think we will see completition of 161.8 ABC at 1.3282 and then again some reversal?
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Im already short using this strategy (see first post above). The rest depends on the market. Good luck!!
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Thanks for this educuational post!! Great information as always!
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Let's see how it goes, might be a big win.
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Nice explanation, thanks for sharing.
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Thank you, sir. Thanks a lot for your help!
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Hey thanks for that. Very interesting! :-)
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