About the Author

Stephen Oakes is an experienced financial titan from New York who brings Wall Street to Main Street. Over the past 11 years, he has developed and tested the renown, Oakes Momentum System, which uses a unique constellation of technical indicators to find timely buy and sell points. He holds an M.B.A. in the United States (New York) and has studied internationally at the Reims School of Management in France.

See All Posts by This Author

Momentum Bullish Divergence

July 23rd, 2006 • Related • Filed Under

To find a bullish divergence on daily charts, we will use a 3-month charting window. You may use charts that are greater than the 3-month period, but do not try this technique when looking at charts under the given 3-month time frame. Be certain to use a 28-period momentum indicator as well. With this 28-period, each momentum length will be 1 hour each. When a divergence is found make sure that the divergence lasts at least six periods.

The steps used in finding a divergence are as follows:

  1. Find the lowest price low on the chart and mark it with the letter A.
  2. Now mark the momentum indicator with the letter B for the same time and date as point A.
  3. Mark the previous momentum low with a C.
  4. Find the price that corresponds to C and mark it with a D. You should now have a configuration which looks like the following illustration below
  5. Now locate the highest point between your point B and C and mark it with an E. This point is our buying point. After the stock trades further past point B do not buy until the momentum breaks past this point E.

Post a Response

You must be logged in to post a comment.