A different but seemingly effective concept for indicating divergence. Unfortunately only available in protected EL code and I'm not a programmer. Not sure how it indicates bearish signals. Perhaps the following link (details and more examples) might inspire somebody to create something similar? Go to: Precision Divergence Finder
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Once you got the Demand Index you need to look for divergences. The divergence finder possibly scans for divergences, using different periods for the Demand Index and then adds them up.
The idea is not bad at all. Divergence stands for a weakening = loss of momentum of a prevailing trend, not yet its reversal. If the trend is weakening across various timeframes a reversal might be imminent.
However, I believe that the indicator also will produce a significant number of false signals, as is usually the case with unfiltered divergences.
Last edited by Fat Tails; January 22nd, 2011 at 08:24 AM.
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