thE hAnDbook of tEchnicAL AnALySiSsignificant bearish divergence around 2008 to 2009 and again in 2010. This
was followed by bullish divergence in 2011. From this perspective, the net non‐
commercials seems to be an accurate indicator of future market action, especially
when significant divergence occurs around the historic highs and lows, as indi-
cated on the chart.
9.6.1.4 examples of price to seasonal Divergence Divergence may also be
derived from non‐confirmation between current price and its expected seasonal
price. Seasonal prices may be averaged over 5, 10, 20, or even 30 years, with some
providers excluding outlier events in order to give a more representative price that
is free from various distortions. The mode of averaging may also differ between
providers, ranging from simple to weighted averages.
The supporting data series will be comprised of the seasonal prices. It is best to
use at least one short‐ and another longer‐term seasonal chart in order to identify
any discrepancies or change in market behavior. All divergences should only entail
participatory action once there is clear and significant price confirmation.
Figure 9.100 Forecasting Reversals via USD Index Futures to Net Non‐Commercials
Divergence.