Nasdaq ATR Entry with Hidden Divergence

The Nasdaq ATR Entry with hidden divergence met all the criteria of the TradeFlow analysis and produced a very nice profit, as well.

Nasdaq ATR Entry with Hidden Divergence

On the 3 minute chart below, beginning with the red arrow, the ADX has made a magenta peak.  This indicates that price will likely retrace back to the ATR.  When price approaches the ATR, the yellow dash lines indicate the signs that price would go up.  In other words, in this example the Nasdaq ATR Entry with hidden divergence meets all the criteria needed for entry.  The blue arrow indicates the exact bar were you would have entered (6526.75).

Nasdaq ATR Entry with Hidden Divergence

Remember, divergence is a momentum signal so the move should happen relatively quickly.   In this case, the market went straight up producing a 25 point gain.   In this case, there was volume divergence on the lows (sellers were decreasing which indicated a lack of interest) and the Stochastics indicated hidden divergence (higher lows with lower lows).  Plus, since the ADX remained blue after the magenta peak, with the higher timeframe also remaining blue on the ADX, then more likely than not, a test of the previous high would be achieved.

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About Gail Mercer

Gail Mercer, Founder of TradersHelpDesk, is a highly respected trader, trainer, author, and speaker residing in North Carolina. She has over 15 years of experience in trading and in the development of custom indicators.

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