Watch the video below to see a suggested trading strategy with the High probability oscillator for hidden divergence.
The strategy suggests precise entry and exit points.
Hidden divergence is regarded as a high probability trading strategy mainly because it is a trend continuation divergence. The indicator prints the hidden divergence lines for you, so you do not have to strain your eyes most of the time searching for hidden divergence.
Like regular divergences, hidden divergences can be bullish and bearish!
Hidden bearish divergence
We are facing a hidden bearish divergence when the price makes descending lows but the indicator makes rising highs.
The theory is great, but these divergences are harder to see since the points may be farther apart in time and the indicator has fluctuated quite a bit, giving the feeling that there is no apparent relationship between those points.
One of my most obvious mistakes for not having interpreted a hidden bearish divergence well, we have it in this OHL chart.
It is appreciable to the naked eye that both the MACD and the RSI (Relative Strength Index), made a higher maximum in February than in September, which is a hidden bearish divergence.
At that time I thought the price was more important, and that I could be making an ABCD movement, you can later confirm my mistake.
Bullish hidden divergences arise when the price makes rising lows, but the indicator makes falling lows.
bullish hidden divergence
The price made ascending lows, while the indicator in December fell from the September lows, giving a buy signal due to hidden divergence.