[r4bb1t]

when you start learning of technical analysis.
you had to hear 'Divergence Signal' hundred of times that says those are powerful reversal signal.
you know what?
all the oscillators that has Divergence signals are calculated by exponential moving average. such as famous MACD, RSI.
but what if replacing EMA to SMA from the equation?
divergence signals are gone.
this implies that divergence signals are not from the oscillator calculation. exponential moving average generates them.
it is just that the power of movement doesn't increasing or decreasing 'exponentially'
do you believe that a Trend must have exponential movement?
in my opinion divergence signal is most overestimate technique. and it makes critical trading failure.

[PhilBeachBoy]

You don't seem to know at all what you are talking about. Divergence is not always computed in only the way you seem to suggest. Divergence behavior of bounded oscillator-type indicators does appear on many different indicators. Is it useful? It can be very powerful. Does it fail? Of course it does. But perfection is not something attainable anyway in any indicator. It is a matter of proportion of its successes. How you decide to classify the occurrence of divergence requires many decisions..how long is the lookback period, are equal indicator extremes gong to be included, how many bars apart are accceptable, what about situations where a third less extreme point follows the two..this usually implies that the first divergence trade will be somewhat underwater, but this next extreme will often work. The less lag, the greatest smoothness and the retention of sharpness at the turn in the indicator assists in the divergence signal being timely and usefull. Classifying divergence in real-time manually by the trader is difficult in the heat of battle. The computer algorithms hae improved over the years to perform this classification. This presents an objective rule-base way to do this but it still requires all the preceeding decisions to be made and coded or entered as inputs by the user. Important tops and bottoms often are accompanied by clear divergence; it is a matter of filtering out the erroneous signals by some means...which is pretty much the problem we face with every trading approach.

[Tams]

>Does Divergence Signals really work?

can you define "work"?

[Head2k]

The only way to find out if something works is to test it yourself, not starting polls about it.

[bigsnack]

I personally found that I erased a lot of my trading mistakes when I stopped using divergence to assist with trading decisions. Like with most things that are trading related, the context of when the divergence occurs is key, and I didn't get that when I was exploring using divergence as an entry trigger. I'm sure it works great for the people that have done the research and fit it into their trading plan, but I'm definitely not there with it.

[peterjerome]

divergence is another tool...not a holy grail...knowing how & when to use it can be effective.
peter.

[choicecap1]

Divergence is nothing more that price rejection faster at certain level,so if you can identify other indications of where to expect price to have this type of action(sop/resist) then you dont even need the indicator to find it.
All you need to do is watch what happen there and price action would tell you if a divergence pattern is likely to ocurr before the indicator shows it.
i wich i was smarter to post some chart but I'm not.

[flynhigher]

For my analysis I use Divergences. I use a hierarchy system when evaluating a stock. However, divergences are certainly not a buy dont buy issue. They simply help me stack the odds more in my favor.

I also wonder which divergences people like and which divergences people dont like.