It shows you when the market is holding back, usually when it reaches a SR/pivot/fibonacho line, and works on all timeframes. I'll add some pictures in the end, to show you what it's all about.
The problem with this divergence is that it may occur in trends, when the market is holding back a bit, but still going the wrong way (the small dips in a trend), so it is not a trade signal by itself, it needs a trigger. I have traded this signal on it's own and it gives about 40/60 win/loss with a 1:1 RR, so it does need something extra. It does way better with a soft martingale (double trade on the next signal when distance=x pips). I've tried some (zero-lag) MA's, lowpass filters (better), and even a neural network (and yes, that worked. No, i will not share that). But it needs a better trigger.
Lo and behold HGI (all hail the Bob!). If there was a divergence, wait for the trigger (HGI big arrows/RADs) and trade.
Exit signals are a HGI reverse signals. Blue waves should be ignored because the divergence signal is earlier than the blue waves; if you exit on a blue wave you cut yourself short. Remember how blue waves followed by a big arrow are a huge signal? This one is faster.
So there is the trade idea.
if (Divergence(lastNumberOfCandles))
if (HGISignal)
return profit; //
And yes, i know HGI signals lag and aren't realtime, but the combination gives very strong signals on every timeframe, it might even work as a scalper.
I'll add another screenshot of today's EURUSD M5. Not an ideal situation but watch the yellow divergence lines and the 10 pip possible profit. That screenshot had 20 pips (with TP=10) in one day without false signals. Set TP to 5 and trade all the major pairs === profit.
I have been coding a bit and might produce something, but i really cannot share the divergence code, because it is not mine. The idea itself is not copyrighted, so if somebody else can have a go at it? Public knowledge is RSI period=21, momentum period=20, both on closed candles.
EDIT: the yellow/red lines is what you are looking for
