When trading harmonic patterns in the forex market easily the hardest question to answer is .
When do we enter a trade
Consider these two charts
In both examples we are expecting the market to turn and give us lots of pips. In reality what sometimes happens with these patterns is that they carry on going in the same direction and stop us out or keep going putting us into drawdown and we then wait for the market to turn in our favour.
What we need is something to give us an edge . A filter if you like to give us an extra reason to enter the trade.
The answer is Stochastic Divergence.
Now lets take a look with a stochastic oscilator on the chart and some very easy to spot divergence.
As you can see the divergence took away the guess work . It gave you that extra reason to enter a trade off those patterns.
This does not of course mean that every pattern that you see that has divergence is going to be a winner , but on backtesting the prescence of the divergence does seem to tip the scales a bit more in your favour!
Divergence isnt really that hard to see and we teach how to recognise and spot divergence in our daily trade room.