Divergence Trade Strategy (5) Why hidden divergence implies continuation of trend?

Contents

Introduction
Why hidden divergence implies continuation of trend?

Introduction

This is the fifth article about divergence trade strategy, and this is the last article.

Divergence Trade Strategy (1) Difference between Regular Divergence and Hidden Divergence

Introduction I'd like to write five articles about “Divergence” from now on. "Divergence" in forex trading means a p...

Divergence Trade Strategy (2) How to avoid fake of divergence

Introduction In the last article, I introduced the difference between regular divergence and hidden divergence. ...

Divergence Trade Strategy (3) Why we delay being aware of occurrence of divergence?

Introduction This is the third article about divergence trade strategy. We can easily find divergence by ...

Divergence Trade Strategy (4) How to cut loss when you enter due to occurrence of divergence

Introduction This is the 4th article about divergence trade strategy. In the articles I have written so far ...

In this article, I would like to write why hidden divergence implies continuing trends?

I use divergence for my daily trading, but hidden divergence is clearly easier to use than regular divergence. The reason is that it is based in trend follow, and entry point is “buy on dips” or “sell on rallies” while the trend continues. Mr. Cardwell, who first advocated the hidden divergence (reversal), is amazing!

So, why hidden implies a continuation of the trend?

Why hidden divergence implies continuation of trend?

Why does hidden divergence suggest a continuing trend?

Taking RSI as an example, the formula for calculating RSI is as follows.
RSI = Ratio of rising and falling widths in the last certain period

RSIs at two different timing are calculated at different periods.

On occurrence of hidden divergence on an uptrend which connects two points (Lower Low and High Low) is affected by;
“The strong momentum of the early stage of uptrend that is included in the formula of the oscillator at the Lower Low, but is not included (by the passage of time) in the formula of the oscillator at the Higher Low”

The value of the oscillator, which shows the market momentum, is similar to the engine speed.
While increasing the car speed, engine speed decreases once each time a gear is changed from a low speed gear to a high speed gear, and then increases again. However, increase of engine speed is smaller than increase of car speed.
The point where the car speed is the highest is where the engine of the high-speed gear begins to decrease.

In the market where many people participate, something like moment of inertia similar to automobiles is working,

Hidden divergence means that when the chart starts to rise, the market will accelerate again with the addition of less power.
Regular divergence means that when the chart rises to the maximum, the power of the market is not the highest point but the peak of a little weak place.

With this, I would like to finish the five articles about divergence trade strategy.
(Although I may add it again.)