The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Divergence Analysis

the Trading Professional, where she employs the spread or differential between

various inflection points as a basis for price projections.

Chapter 9 Review Questions

1. Describe the main challenges in the application of divergence analysis.


2. Explain how the adverse effects of multicollinearity could be avoided or
   reduced.


3. Describe George Lane’s Bull and Bear setups and discuss the challenges in
   identifying such setups.


4. Give examples where volume divergence may be ineffective.


5. Describe the relationship between divergence and price momentum.


6. Describe an ideal divergence setup and its underlying weaknesses.


7. What are the methods for identifying divergence?


8. Explain how you would trade a divergent setup.

reFerenCes

Blau, William. 1995. Momentum, Direction and Divergence. New York: John Wiley & Sons.

Brown, Constance M. 1999. Technical Analysis for the Trading Professional. New York:

McGraw‐Hill.

LeBeau, Charles, and David W. Lucas. 1992. Technical Traders Guide to Computer Analysis

of the Futures Market. Homewood, IL: Business One Irwin.

Pring, Martin J. 2002. Technical Analysis Explained: The successful Investor’s Guide to

Spotting Investment Trends and Turning Points. 4th ed. New York: McGraw‐Hill.