Divergence I - Example

Quick overview of the missed trade. Now let’s zoom in a bit.

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Theory


This was on EURUSD. According to textbook technicals this trade would have been missed. But there is a way to figure out why... Even though you don't understand the technicals and entry model just yet, you can begin to anticipate this.

All our technical tools were so in-line. Could have been such a nice entry.... but we had the one thing in our way.


DIVERGENCE.... it doesn't happen often, but when it does happen it’s good to note why.


You see, at EXACTLY the same time on our DXY chart on ETF, it was ALREADY reacting from a strong array, price was already in the shift zone, displacement and OTE even, as seen below.

I like to mark this divergence with ---¤--- to keep it simple that I know that suddenly, instead of moving inverse from each other, DXY and my primary pairs are moving in conjunction. Which isn't supposed to happen.