Hidden Bullish and Trade Hidden Bearish Divergence Energies

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

Energy Hidden Bullish Divergence Setup

This setup occurs when price is making a higher low ( HL ), but the oscillator (technical indicator) is displaying a lower low (LL). To remember them easily think of them as W-shapes on Chart patterns. It occurs when there's a price retracement in an upward trend.

The example illustrated and explained below highlights an image of this energies formation, from the screenshot the price made a higher low (HL) but the indicator made a lower low (LL), this portrays that there was a diverging signal between the price and indicator. This signal portrays that soon the market up trend is going to resume. In other words it highlights this was just a retracement in an upward trend.

This confirms that a price retracement move is complete and illustrates underlying strength of an upward trend.

Energies Hidden Bearish Divergence Setup

This setup occurs when price is making a lower high ( LH ), but the oscillator is showing a higher high ( HH ). To remember them easily think of them as M-shapes on Chart patterns. It occurs when there's a retracement in a downwards trend.

The example illustrated and explained below highlights an image of this energies formation, from the screenshot the price made lower high (LH) but the technical indicator made a higher high (HH), this portrays that there was a divergence pattern between the price & the indicator. This portrays that soon the market down trend is going to resume. In other words it highlights this was just a retracement in a downward trend.

This confirms that a price retracement move is complete and indicates underlying strength of a downwards trend.

Other popular technical indicators used are Commodities Channel Index technical indicator (CCI), Stochastic Indicator, RSI and MACD. MACD & RSI are the best technical indicators.

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

However, a trader should also combine this energies setup with another indicator like the stochastic oscillator or moving average and buy when the energies instrument is oversold, and sell when the energies instrument is overbought.

Combining Hidden Divergence Setup with MA Crossover Method

A good indicator to combine these energies setups is the moving average indicator using the MA cross over method. This will create a good strategy.

MA Crossover Method

In this method, once the signal is given, a trader will then wait for the MA crossover method to give a buy/sell trading signal in the same direction, if there's a bullish divergence setup between the price and technical indicator, wait for the MA crossover system to give an upward crossover signal, while for a bearish diverging pattern wait for the MA crossover system to give a downward bearish crossover signal.

By combining this signal with other technical indicators this way a trader will avoid whip-saws when it comes to trading this signal.

Combining with Energy Trading Fib Retracement Levels

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

Because the hidden divergence pattern is just a retracement in an upward trend we can combine the signal with the most popular retracement tool that is the Fibonacci retracement zones. The example illustrated and explained below highlights that when this energies set-up appeared on the chart, the price had just hit 38.2% level. When price tested this level, this would have been a good level to set a buy order.

Combining with Energies Trading Fibonacci Expansion Levels

In the example above once the buy energies trade was placed, a trader would then need to calculate where to set the take profit for this trade. To do this a trader would need to use the Energies Trading Fibonacci Expansion Levels.

The Fibo expansion was drawn as illustrated and shown on chart as shown & illustrated below.

For this example there were three take profit areas:

Expansion Level 61.8% - 131 pips profit

Expansion Level 100.0% - 212 pips profit

Expansion Level 161.8% - 337 pips profit

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