When looking for divergence in moneystream should I focus on lower lows higher highs etc or just the overall direction the indicator trend is going vs price.  

I'm not a big moneystream user, but a divergence occurs when price is doing one thing (making lows or highs) and the indicator is not confirming.  

Like this 5 min chart of Twitter (TWTR).

At least that's what divergence means to me.

David John Hall

Seeing as we've already started this discussion using TWTR, let's see how it plays out with moneystream as the guide.

TWTR gapped up this morning and consolidated and is now looking for new highs.  And moneystream is kind of confirming.  Does it even work on intraday charts?  No idea...

Next, here's my target after the base break, based on a 50% retracement of that down move.

The stop would be around the $30.97 area.  So about $1 risk for about $3 gain.  

Oh, and breakouts fail a lot.  Sometimes I think spending time with monks in the mountains would be better training for trading breakouts.  But if you keep your targets at least 3 times your stops you can make money.  

But this is just an exercise -- I want to see how moneystream plays out in this trade.  

David John Hall

Well, twitter looks to have made a break and moneystream is now at new highs.  

David John Hall

New highs here after a couple bars consolidation.  What I don't like here is the lack of volume coming in.  I'd move my stop to just below the breakout zone essentially making this a free trade.

Also, moneystream still looking strong.

Time for work!  

TWTR is still making new highs, moneystream is confirming (if it even works intraday haha) and the stop is at break even.  

Let's see what the rest of the day brings.

Have a good day everyone.

Very informative davidjohn.  You are the man!!  I have learned alot from this.  Feel free to keep it coming.  ha ha

Also, davidjohn,  looking at Aapl today can you analyze the downward breakout at approx 12:50.  I would really love to learn the best way to analyze which direction a breakout might occur.  Thanks.

Turns out TWTR did not want to hit my target and slid back for a wash.  

I guess if you were pkay with tighter stops and smaller potential gains you could have gotten out a few different ways.

A trend line break:

Swing lows:

And seeing as this is a thread on moneystream, a cross of moneystream on a moving average:

In my experience, 50-60% of breakouts fail, but you should be able to get sme very nice runs about 2-3 times a month daytrading and the rest will be small gains.  

This was cool -- I'll have to do this again sometime.

David John Hall

Hi bryclen,

I remmeber when I first started trading I went into a friend's office (we worked together at the time) after another failed breakout and I yelled: I need to learn how to tell if a breakout is going to fail!

Haha.  If i knew that then I would be a fat with cash in no time.  For me it's more about how I manage the breakouts I trade -- cutting the losers fast and letting the winners move.

As far as knowing which way a breakout will go -- I only know once it happens.  i try not to anticipate.  

So here in AAPL it's heading sideways in a channel.  If we're looking at moneystream, we see a cross to the downside under a moving average before the breakout.  

But one instance does not make a rule.  You'd have to look at more charts and see if you notice a pattern developing.

Here's the chart:

The upside fakeout around 11:50 is a sign as well.

Let me know if you discover anything!

David John Hall 

Thanks for the knowledge