Hi Helen and Bonsai - thanks for your reply.
I have read both of Elder’s books and found them full of common sense and without the sensationalist hype you often find. He also carefully explains the fundamentals behind every indicator he introduces. Many authors leave readers simply remembering an acronym and how it should be used.
Anyway - he is a great fan of divergences in general and MACD/RSI divergences in particular. I initially dismissed these as fussy over complications of perfectly good indicators until I realised that neither MACD nor RSI were particularly good on their own and that by looking at price divergences many false signals were removed.
Do you use divergences with your own trading? I am interested in the effectiveness in different time frames. Elder believes these signals should be very powerful in any time frame. However full, class A, divergences occur very rarely on daily charts so I was wondering about there use intra-day? Quick back-test by eye shows that they might lose something in such a short time frame – have you looked further into this at all? Surely the theory behind this set up should be the same in any time frame.
I’d be interested to hear your comments and opinion on this and any other of the techniques described in either book.
I don’t know why Elder’s books aren’t more popular in the UK – maybe his patient ‘’sit, watch and wait’ approach doesn’t appeal to many.