Forex Technical Analysis Articles - Volume based indicators - Comparing 4H to Daily Charts

Technical Analysis

1. Introduction

2. Function & Calculation

3. Ex. 1 - Long Term Divergence

4. Ex. - 1 Cont.

5. Ex. - 1 Conclusion

6. Ex. 2 - Short Term Divergence

7. Ex.2 - Cont.

8. Recap of Ex. 2

9. Ex. 2 - Final Divergence

10. Comparing 4H to Daily Charts

11. Ex.3 - Fundamental Release

Compare the 4H chart to a daily chart and see what the two tell us using A/D:

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Figure 10 – A daily graph of EUR/USD from July 18th through October 2005.

There is actually a bullish divergence that could predict the EUR/USD’s move up. Trendline analysis could have too.
From Aug 11th to Sept 4th, there is no divergence on the daily graph the way there is on the 4H.
The daily graph also shows the full extent of the USD gains after the third divergence studied. The Dollar gains all the way to 1.1900 before a significant EUR rally. (We saw the Dollar rally end at 1.2200).

These observations seem to imply that the 2 indicators (one daily, one 4 hourly) give contradictory information. The daily misses stops and pauses through out the day that could clue one into the trading dynamic of a rally. If there is high volume on candles that have shapes that imply bulls and bears are wrestling for control (see the highlighted boxes below) then it will change the A/D line. On the daily, they may be glossed over.

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Figure 11 – A final look at the EUR/USD from Aug. 3rd to Sept. 15th 2005.

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