Wednesday, April 16, 2008

Divergence and the Tick

Here is a tick chart of GBP.USD. I have inserted a line at the highs and lows. I continue to struggle with interpreting divergence. This chart looks like is is in consolidation, so a breakout set up is probably best, but I'd like some comments on where you readers see a divergence set-up. What is used for the MACD, the MACD itself or the histogram? I have seen both used. This chart shows two opposite divergences for MACD and the histogram, at line B and D. Perhaps the double top makes it null and void. Can anyone help on interpreting this chart?

Tick: I have read that back testing should be done with tick data, since it removes the time element. I am beginning to read more about using tick charts, after looking at them for a few days I like what I see. Price action matters more than time data. Comments?


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