MACD Convergence Divergence

Hi
Thanks Yes I am reffering to the bearish divergence on the weekly charts. I would like to ask is as Satyam is showing a Bearish Divergence
1. should a trader go short or sell off their holdings in this counter.
2. If yes what sould be the stop loss in this case and how to arrive at the stop loss in case of sale.
Please advise

Hi gopu
Divergences are very crude way of using oscillators.If you have spent time watching intraday charts you would have noticed tht momentum indicators will show divergence for a while and suddenly those divergences vanish as price breaks new territory.They are basically hindsight tools.Divergences sit pretty in hindsight agonizing how u have missed the top.However they get erased out quickly if price moves quickly in the opposite direction.And thts why u will never see a failed divergence when u look back at charts.Seems very simple but very much overlooked.
Crossovers(right hand particularly) are better use of momentum osc. like stochastics

Cheers
CV



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"Trade what you see not what you think and definitely not what others think

Hi All

What to do when :-

Price makes a new low, but out one indicator shows divergence with respect to price, while the other one shows convergence with the price.



In the above chart, price reached a new low (during last 6 months) on May 25, but CMF shows higher bottom. So, this is a case of Bullish Divergence (Class A)...right?
I feel that it should break the congestion at 205 for a real upmove to corroborate the divergence.

Now, if we look at stochastics, it is showing Convergence with respect to price as it is making lower highs.

So, in such a situation how to interpret when one shows divergence while the other one shows convergence?

take the help of indicators which give buy/sell signals

Can you name some?