Hello everyone. Today, I will talk about a highly effective strategy that we can use in cryptocurrencies and other financial instruments: SMT Divergences.
Before we begin, let's gather more information about two important topics that are crucial for us: Correlation and PD Array.
a-) Correlation: Correlation is a measure of how two variables change together. Variables with a positive correlation tend to move together, while variables with a negative correlation move in opposite directions. Variables that are uncorrelated move independently of each other.
b-) PD Array: It allows us to divide the price into premium and discount segments. We draw a Fibonacci retracement tool between relevant swing zones (0 - 0.5 - 1), and we label the area above the 0.5 level as expensive and the area below it as cheap. The majority of pattern traders fail because they are unaware of this. We wouldn't want to go long from the expensive region or short from the cheap region, right, gentlemen?
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Great, we have a good understanding of correlation and PD Array. Now let's move on to the currency pairs we will be examining: Solana and Avax. Their linear correlation is even higher than the correlation between BTC and ETH! (over the past year)
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I can sense your anticipation for the topic of SMT Divergences. Well, now is the perfect time. Let's first recap what RSI Divergences are, something that almost everyone who uses TradingView has added to their charts and relies on.
We accept that there is a linear correlation between RSI and the instrument of interest, and we expect them to move in a linear manner. We define RSI divergence as the situation where the direction determined by the calculated RSI value does not parallel the price movement of the corresponding instrument. We can make the same definition for two currency pairs with linear correlation, such as ETH and BTC. However, the important point to note is that while we can observe multiple divergences in one region with RSI divergences, with SMT, we may observe only one divergence in that particular region. This distinction allows us to differentiate between SMT conformity and 'cross pair manipulation' effectively.
That's correct! You have learned about correlation, SMT Divergences, and PD Array, which determine whether the price is expensive or cheap. Now, let's move on to our strategy: looking for negative divergences in the expensive region and positive divergences in the cheap region
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If you liked the flood I prepared for you, please hit the like button. If you want me to create content about liquidity engineering or the anatomy of imbalances, you can leave a comment, my friends. Wishing you all good and profitable days ahead..
#OKEX #OKXIDEAS #TRADINGVIEW
Before we begin, let's gather more information about two important topics that are crucial for us: Correlation and PD Array.
a-) Correlation: Correlation is a measure of how two variables change together. Variables with a positive correlation tend to move together, while variables with a negative correlation move in opposite directions. Variables that are uncorrelated move independently of each other.
b-) PD Array: It allows us to divide the price into premium and discount segments. We draw a Fibonacci retracement tool between relevant swing zones (0 - 0.5 - 1), and we label the area above the 0.5 level as expensive and the area below it as cheap. The majority of pattern traders fail because they are unaware of this. We wouldn't want to go long from the expensive region or short from the cheap region, right, gentlemen?
-
Great, we have a good understanding of correlation and PD Array. Now let's move on to the currency pairs we will be examining: Solana and Avax. Their linear correlation is even higher than the correlation between BTC and ETH! (over the past year)
-
I can sense your anticipation for the topic of SMT Divergences. Well, now is the perfect time. Let's first recap what RSI Divergences are, something that almost everyone who uses TradingView has added to their charts and relies on.
We accept that there is a linear correlation between RSI and the instrument of interest, and we expect them to move in a linear manner. We define RSI divergence as the situation where the direction determined by the calculated RSI value does not parallel the price movement of the corresponding instrument. We can make the same definition for two currency pairs with linear correlation, such as ETH and BTC. However, the important point to note is that while we can observe multiple divergences in one region with RSI divergences, with SMT, we may observe only one divergence in that particular region. This distinction allows us to differentiate between SMT conformity and 'cross pair manipulation' effectively.
That's correct! You have learned about correlation, SMT Divergences, and PD Array, which determine whether the price is expensive or cheap. Now, let's move on to our strategy: looking for negative divergences in the expensive region and positive divergences in the cheap region
-
If you liked the flood I prepared for you, please hit the like button. If you want me to create content about liquidity engineering or the anatomy of imbalances, you can leave a comment, my friends. Wishing you all good and profitable days ahead..
#OKEX #OKXIDEAS #TRADINGVIEW
Comment:
OKX:SOLUSDT.P