Three currency and oil trades using divergence signals on 1-hour and 4-hour charts. GBP/CAD, NZD/CAD, and oil all shorted after pullbacks into consolidation zones, targeting 1:2 risk-reward ratios with Fibonacci extensions.
Hello everyone and welcome to another Divergence University performance and summary, uh, for the week of September— what was that— 13th up to 19th. I'm going to start with the pound CAD. Which is a sell trade. Not yellow, let's make it blue. All right, which is a sell trade. This is the 1-hour chart, and as we can see, the idea here was to follow up on this previous bearish move, get the pullbacks, and attack the sells. So what happened here in reality? We got this first double wave The pullbacks, and then the second wave, which ended right here with divergence. Or at least this is the read that we got. Of course, someone might be looking at it slightly different. Let's say like this, right? But in that case, if that would be the scenario, then you have one more push higher. Anyway, we're not here to. Teach Elliott Waves analysis or cycles analysis. We're here to understand why this trade was taken. As I said, previous bearish move, we got what according to us seemed appropriate count for ABC structure, which is a corrective pattern. We got next to this zone, this previous zone of consolidation or pullbacks. And this is where we get divergences from basically MAs and the histogram. What's interesting to notice here is this bearish candle pattern, and then I think this is where we take the divergence. The entry was after a bit of a pullback. Now, I wasn't the one who took this trade, so that could be simply a pullback someone was waiting for, or It could be just a delayed entry, but in this case the delay is actually better from the original price. Well, it's just a few pips, but still you're gaining at least let's say paying for the spread here, right? With this pullback. So this is for me the confirmation candle, and after the structure divergences, this is where the attack is starting from. Now for us, we're looking for strict risk-reward ratio of 1:2. In such cases, however, if you know how to do analysis, you probably understand that this target could be extended versus the bottom, versus the swing low that we have. So let's say you're collecting target 1 right here, and then you can let the other part, which could be TP2, which could be final target, doesn't matter, versus that zone. And when I'm saying the low, what I mean in this specific case is this level right here. Okay, this is clearly a zone of support and resistance, clearly a zone that the market is likely going to respect. So if you're already in a trade and you see the price reaching that zone, it would be better not to fight the last few pips there, but Take some action right here inside this zone. So that's about pound cat pushed lower. Basically within a single bar or so, we managed to collect some profits. Then we have Kiwi cat from the same cat family. In this case, the situation is slightly more clear or probably more obvious, at least for myself. We have a bearish structure. Then we have the pullback structure. This is where the divergences are happening. This is where we have the false break. And of course, when we look left, we can see that this entire zone right here is a zone of consolidation. The price tried to break above it a few times. Coming from the lows, consolidation, tried to break above and continue, failed, and continuation lower. So we can naturally expect for the price to create some kind of reaction inside this zone. We kind of reached the middle of it, and again, based on the structure that I showed before, this one Basically, we're expecting to see the price dropping lower. In this specific case, it couldn't happen, at least not on that wave. But second attack later on could be a good idea as well, just like we had. I think it was Cat Frank. So on the seventh, as you can see. You have the first tag. This is the one-hour chart here, okay? And the first false break. This is where we get the second false break. This is where we get the divergence as well. And here we're starting to look for the sells, okay? This one fails, right? The price goes up. But then on the eighth. We have the second attack, and if you think about it, this is where the setup fell right here on the 1-hour chart, if I'm not wrong, right? And then this is your 4-hour chart-based attack now. So nothing really changed. The level is still the same, the count is still the same. It's just that the first attack fails here. And this makes a lot of sense because when you're trying to catch a reversal pattern like in this case, you're expecting for this bullish trend to be finished and bearish trend to start. So if you're trying to catch the absolute top or bottom, many times you will be kicked out, uh, in a stop loss— with a stop loss, right? It makes sense, you're trading against the trend. That's why this kind of trading we really advise to be done only after you start understanding market structures, cycles, and waves, because this is really helpful. Otherwise, you will likely turn into a losing trader using this kind of strategy. Okay, when you're trading with the trend, meaning hidden divergences, then it's a bit easier because then you're going with the trend. In such cases, it's much easier for beginner traders because many times your analysis will not be optimal or great or perfect, but still, since you're going with trend, chances of the price to give you whatever you're looking for are much better. So reversals plus based on divergences is kind of advanced Trading again, at least to me. And this is what I wanted to show you. Second attack. You know the level is here. You know the cycle is here. You know the divergence is here. You just need to find this second entry. All right, let's cover the third one, which is the oil. Now for oil, we managed to enjoy the sales, and then we said, all right, let's wait for this pullback. Pullbacks, hidden divergence, absolutely awesome. The zone is in place now. That was the beginning of the zone, by the way, with these spikes right here. But at that stage, this thing simply broke up and created the momentum, so no real adequate sell entry. But after this one right here, it ticked down divergence. We have approximately 50% of that entire move. Which is the fibo-based levels. Again, we have the price action levels. So attack on oil for the cells right there, and this one, as we can see, also managed to fail. So this is pretty much everything I wanted to talk about for this week, guys. If you have any questions, do not hesitate to leave us a comment below, myself or Vlad. Are going to answer you. And of course, keep in mind we have a very nice, interesting Telegram channel where plenty of things are being published related to trading setups, educational materials, and so on. So click the link below, make sure to join our Telegram channel, and I'm sure you're going to enjoy it. Bye for now.
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