Divergence Strategy

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

Divergence trading strategy

This divergence trading setup happens when xagusd price is forming a higher low ( HL ), but the oscillator (indicator) is showing a lower low (LL). To remember them easily think of them as W-shapes on Chart patterns. It occurs when there is a retracement in an upwards Silver trend.

The example explained and shown below shows an image of this divergence set up, from the image the xagusd trading price made a higher low (HL) but the indicator made a lower low (LL), this shows that there was a divergence signal between the xagusd price & indicator. This signal shows that soon the xagusd trading market up silver trend is going to resume. In other words it shows this was just a retracement in an upward silver trend.

Divergence trading strategy

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

Silver Hidden Bearish Divergence

This setup happens when xagusd price is forming 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 is a retracement in a downward Silver trend.

The example explained and shown below shows an image of this silver trading setup, from the image the xagusd price made a lower high (LH) but the indicator made a higher high (HH), this shows that there was a divergence between the xagusd trading price & indicator. This shows that soon the xagusd trading market down silver trend is going to resume. In other words it shows this was just a retracement in a downwards trend.

Divergence trading strategy

This confirms that a retracement move is complete & indicates underlying strength of a downward silver trend.

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

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

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

Combining Hidden XAGUSD Trading Divergence with Moving Average Silver Trading Crossover Strategy

A good indicator to combine these silver trading setups is the moving average indicator using the moving average crossover method. This will create a good trading strategy.

Moving Average Crossover Technique - Divergence trading strategy

In this divergence silver strategy, once the trading signal is given, a trader will then wait for the moving average cross-over technique to give a buy/sell silver trading signal in same direction, if there's a bullish divergence setup between the xagusd price & indicator, wait for the moving average cross-over system to give an upward crossover signal, while for a bearish divergence set-up wait for the moving average cross-over system to give a downwards bearish crossover signal.

By combining this Divergence strategy with other indicators this way a trader will avoid whipsaws when it comes to trading with this xagusd trade signal.

Combining with XAGUSD Trading Fib Retracement Levels

For this example we shall use an upward market trend. Silver Trading - We shall use MACD indicator.

Because the hidden divergence is just a retracement in an upwards silver trend we can combine this silver signal with most popular retracement tool that's the Fibonacci retracement levels. The example explained and shown below shows that when this xagusd trading setup appeared on chart, the xagusd trading price had just hit the 38.20% level. When xagusd price tested this level, this would have been a good level to set a buy order.

Divergence trading strategy set up

Combining with XAGUSD Trading Fib Expansion Levels

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

The Fibonacci expansion was drawn as shown & illustrated on the xagusd chart as shown and illustrated below.

Divergence trading strategy set up

For this example there were three take profit levels:

Silver Fibo Expansion Level 61.80% - 131 pips profit

Fibonacci Expansion Level 100.0% - 212 pips profit

Fibonacci Expansion Level 161.8% - 337 pips profit

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