FIGURE 2.3 Price-Momentum Divergence

FIGURE 2.3 Price-Momentum Divergence much nonsense in trading publications about so-called momentum systems that optimize settings for historic data and claim amazing results.

I've also seen entire trading plans based on price-momentum divergence strategies with many well-chosen examples. I've never seen one of these plans that actually made money, but the systems are sold to naive traders who don't do their homework to prove to themselves how useful (or useless) the setups really are. For every price-momentum divergence example that resulted in a trend reversal, I can just about guarantee there were one or two and probably a lot more that did not result in a trend reversal on the same data. I don't know how many times I've read an article in a trading publication about a momentum divergence strategy where, on the same data on the chart the author used to illustrate price-momentum divergence setup and price reversal, there were other identical setups that would have resulted in losses that the author simply ignored!

But I digress from the important task at hand: how to use Dual Time Frame Momentum Strategies for trade setups.

FIGURE 2.4 Price-Momentum Divergence on EUR/USD

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