How Rewarding Is Divergence Trading In Technical Analysis?

This book has been written in an attempt to shed some light on technical traders in financial markets and to show emprical evidences about using divergences in technical analysis. Moreover, an algorithm is suggested for determining the divergences in financial markets. A trading algorithm with divergences is constructed and tested over the period 2000-2015 to analyze whether divergence trading is profitable or not. The tests are performed with various indicators at different markets including developed stock market indexes (DOW JONES, DAX, FTSE100), emerging stock market indexes (BIST100, BOVESPA, SHCOMP), currency pairs (EURO/Dollar, Dollar/TL), and commodities (Gold/US Dollar, Brent Oil). The book also covers basics of technical analysis like support and resistance levels, trend lines, channels, popular chart patterns and indicators such as Moving Averages, Relative Strength Index, Stochastic Oscillator, MACD, Rate of Change and Commodity Channel Index in trading.