Steve Connell has spent over 17 years working in the finance sector as a trader/market maker and strategist. Over that time he’s worked for several global banks and hedge funds. Steve has a unique insight into a range of financial markets from foreign exchange, commodities to options and futures.
This momentum strategy is very straightforward. All you need is the Bollinger bands indicator and to do some basic checking of chart candles. It trades on chart patterns that display signs of pending momentum – that is upward or downward acceleration in price.
All serious money managers know that the smart money is made not when the market is stable but when the market goes through a sudden state of change. Take for example, the end of a bull run or the imploding of an asset bubble.
This post looks at the strategy of divergence trading which uses oscillators such as MACD and RSI to detect market turning points. Divergence highlights places where momentum is slowing and is likely to reverse.