Stocks & Commodities V. 32:4 (28-30): Expansions & Contractions, Part 2 by Dirk Vandycke

Stocks & Commodities V. 32:4 (28-30): Expansions & Contractions, Part 2 by Dirk Vandycke
Item# V32C04_758VAND
$2.95
Availability: In Stock

Product Description

Expansions & Contractions, Part 2 by Dirk Vandycke

Divergence Of The Fittest

In the first part of this three-part article series, we found out how to measure intrinsic divergences. In this second part, we will identify divergences that take place when price may appear to be strong but has a tendency to close near the lows.

The concept of divergence is nothing new. When one indicator behaves differently than another, it sometimes suggests that a change in trend is about to take place. Technical analysis is all about measuring probabilities rather than forecasting. Because of this, it is difficult to quantify concepts such as divergence. Most attempts get stuck in an algorithmic approach that tries to capture specific graphical setups. This ends up giving you mediocre results. In this article, I will provide a statistical framework that results in an indicator you can use to measure divergences.

WHAT IS DIVERGENCE?

In part 1, I talked about measuring intrinsic divergence, which measures divergence within one time series as opposed to the more popularly used divergence between different time series. On a normal price chart you wonít see intrinsic divergence, but the divergence between different time series ó which I refer to as extrinsic divergence ó is something you can see on a chart. It may, however, lag, and itís difficult to detect algorithmically.




FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.




Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order