Hidden Bullish & CFDs Hidden Bearish Divergence CFDs

Hidden divergence pattern is used by traders as a possible sign for a trend continuation after the price has retraced. It is a trading signal that the original trend is resuming. This is the best setup to trade because it is in same direction as that one of the continuing market trend.

CFDs Hidden Bullish Divergence

This setup happens when price is making a higher low ( HL ), but the oscillator (indicator) is showing a lower low ( LL ). To remember these setups easily think of these setups as W shapes on Chart patterns. It forms when there's a retracement in an upwards cfds trend.

The example illustrated and shown below shows an image of this cfd formation, from the screen-shot the price made higher low ( HL ) but the indicator made a lower low ( LL ), this displays that there was a diverging signal between the price & indicator. This trading signal highlights that soon the cfd market up trend is going to resume. In other words it displays this was just a retracement in an upward cfd trend.

This confirms that a retracement move is exhausted & illustrates the underlying momentum of an upward trend.

CFDs Hidden Bearish Divergence

This setup happens when price is making a lower high ( LH ), but the oscillator is showing a higher high ( HH ). To remember these setups easily think of these setups as Mshapes on Chart patterns. It forms when there's a retracement in a downwards cfds trend.

The example illustrated and shown below shows an image of this cfd formation, from the screen-shot the price made lower high (LH) but the indicator made a higher high (HH), this displays that there was a divergence pattern between the price & the indicator. This displays that soon the cfd market down cfd trend is going to resume. In other words it displays this was just a retracement in a downward trend.

This confirms that a retracement move is exhausted and indicates underlying momentum of a downwards cfds trend.

Other popular technical indicators used are CCI indicator (CCI), Stochastic Oscillator, RSI & MACD. MACD & RSI are the best indicators.

NB: Hidden divergence pattern setup is the best type divergence pattern setup to trade because it gives a trading signal that's in the same direction with the current trend, thus it has a high reward to risk ratio. It provides for best possible entry.

However, one should combine this cfd setup with another indicator like the stochastic oscillator or moving average & buy when the cfd is oversold, and sell when the cfd is overbought.

Combining Hidden Divergence Pattern with MA Crossover Strategy Method

A good technical indicator to combine these cfd setups is the moving average indicator using the moving average cross-over method. This will create a good trading strategy.

MA Crossover Strategy Method

In this method, once the trading signal is given, one will then wait for the MA cross-over technique to give a buy/sell signal in same direction, if there's a bullish divergence set up between the price & technical indicator, wait for the MA crossover system to give an up-ward cross-over signal, while for a bearish diverging pattern wait for the MA crossover trading method to give a downward bearish crossover trading signal.

By combining this trading signal with other technical indicators this way one will avoid whipsaws when it comes to trading this cfds trade signal.

Combining with CFDs Fib Retracement Levels

For this example we will use an upwards market trend. We shall use the MACD indicator.

Because the hidden divergence pattern is just a price retracement in an upwards trend we can combine the cfd trading signal with most popular retracement analysis indicator that is the Fibo retracement areas. The example illustrated and shown below displays that when this cfd set-up appeared on the chart, the price had just hit the 38.20% level. When price tested this level, this would have been a good point to place a buy trade order.

Combining with CFDs Fibo Expansion Levels

In the cfd example shown above once the buy cfd trade was placed, one would then need to calculate where to set take profit for this trade. To do this one would need to use the CFDs Fibo Expansion Levels.

The Fib expansion was drawn as illustrated & shown on the chart as illustrated & shown below.

For this example there were three take profit areas:

Expansion Level 61.80% - 131 pips profit

Expansion Level 100.00% - 212 pips profit

Expansion Level 161.80% - 337 pips profit

From this strategy combined with Fibonacci indicator would have provided a good trading strategy with a good amount of profit set using these take profit levels.