EURUSD divergence trading question?

[SanMiguel]

If you're trading divergence, do you wait for a confirmation of the trend, then a pullback, then an entry?
For example, the support line in yellow has been tested twice, why not just enter a BUY at that point with 70SL (current ATR).
Or would you wait for a small indication of a bounce off, then a pullback to the bollingers, then your entry?

 

[bansir]

If you're trading divergence, do you wait for a confirmation of the trend, then a pullback, then an entry?
For example, the support line in yellow has been tested twice, why not just enter a BUY at that point with 70SL (current ATR).
Or would you wait for a small indication of a bounce off, then a pullback to the bollingers, then your entry?

Hi San Miguel,
Nice chart+TA. I think looking for the long set up is a good idea.
For me, I wouldn't contemplate long in the region you indicate because I don't see a positive divergent bottom on the MFI(14). Sometimes an apparent divergence can fail spectacularly on Fx. If there was a PDB I think I would be looking to go long on a break of your upper most trend line at the top of the chart.

I'm only demo trading though so not exactly qualified to bump my gums on the subject.
Best of luck,
Neil

 

[SanMiguel]

Yes, but on the MFI, the longer yellow line shows a hidden divergence:
Hidden Higher Low on the PA Lower Low on the MFI BUY signal

The shorter yellow line shows a trend confirmation of the uptrend.

However, this is a very minor uptrend and you are right, things can swing dramatically.
The thing that convinced me was the support line on the PA.
200EMA is slightly in up direction.
50EMS is not though (pink line).

Hmm