A few days ago, I led a webinar on the subject of price-oscillator divergences. There was a lot of interest in the subject, so I thought I would post the chart illustrations of the different kinds of divergences here, along with some explanations:

—————–

Bearish Regular Divergence – price makes a higher high while the oscillator makes a lower high. This is a warning or indication of a potential impending bearish reversal after an uptrend.

—————–

Bullish Regular Divergence – price makes a lower low while the oscillator makes a higher low. This is a warning or indication of a potential impending bullish reversal after a downtrend.

—————–

Bearish Hidden Divergence – price makes a lower high while the oscillator makes a higher high. This is a warning or indication of a potential downtrend continuation.

—————–

Bullish Hidden Divergence – price makes a higher low while the oscillator makes a lower low. This is a warning or indication of a potential uptrend continuation.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Once again, price action on EUR/USD, a daily chart of which is shown, has turned up and respected a key uptrend support line extending from the March lows. This occurs after dollar-strengthening price action for the past week has prompted EUR/USD to correct back down to this uptrend line on the heels of hitting a 14-month high around 1.5060 in the beginning of the week. Today’s tentative trendline bounce hints at a potential uptrend continuation. For more technical analysis on this currency pair, please click here for Thursday’s (10/29/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Price action on AUD/USD, a daily chart of which is shown, has displayed some significant U.S. dollar strengthening in the past several trading days, much in the same manner as other dollar-based currency pairs. But the strong uptrend in AUD/USD, which has been firmly in place since early March, is currently still very much intact. The current bull market correction in this currency pair has thus far constituted a normal, minor retracement after over-extending to the upside in a steep bullish run. For more technical analysis on this currency pair, please click here for Wednesday’s (10/28/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

I will be leading a webinar shortly on price-oscillator divergences. Click on the following link to attend: http://www.fxstreet.com/live/sessions/session.aspx?id=156b7317-d2e0-4f3a-902b-3113baea3c0a . Thank you!

Bearish price action on USD/CHF, a daily chart of which is shown, is approaching parity within the context of a steep, continuing downtrend. Parity (at 1 U.S. dollar to 1 Swiss franc) was last hit in July of 2008. Therefore, the long-term low from last week, which fell just shy of reaching parity, represented a 15-month low for the pair. For more technical analysis on this currency pair, please click here for Monday’s (10/26/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

I will be giving a webinar entitled, “Trading Price-Oscillator Divergences in the Forex Market” right here on FXstreet.com next week. It will be held on Tuesday, October 27, 2009 at 15:00 GMT (11:00 AM U.S. Eastern Time). Discover the ins and outs of trading price-oscillator divergences in the Forex market. Various types of divergences occur often on currency charts. Learn how they can be used as important warnings or confirmations of significant impending price events. For more information and to pre-register, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=156b7317-d2e0-4f3a-902b-3113baea3c0a .

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Bullish price action for the last two weeks on USD/JPY, a daily chart of which is shown, has formed a steep short-term uptrend within the context of a longer-term downtrend channel. Price has also just reached strong resistance in the 92.00 support/resistance region, and additionally, is approaching the approximate upper resistance border of the rough parallel downtrend channel. Momentum indications are showing signs that price on this currency pair may be close to overbought. For more technical analysis on this currency pair, please click here for Friday’s (10/23/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Price action on spot gold, a daily chart of which is shown, has formed the appearance of a pennant pattern consolidation after reaching new all-time highs last week. This potential continuation pattern occurs within the context of a strong continuing uptrend. The all-time highs that were reached last week, just above 1070, represented a 161.8% Fibonacci extension of the prior bullish run. On the latest bullish run that represents the pole of the pennant pattern, the important 161.8% Fibonacci extension resides around the 1125 level. For more technical analysis on spot gold, please click here for Thursday’s (10/22/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Price action on GBP/USD, a daily chart of which is shown, has just made a clean breakout above a long-term downtrend resistance line extending from the July 2008 high. This breakout is a significant first step in possibly breaking out of the prolonged consolidation that has characterized this currency pair since June of this year. Whereas other major dollar-based pairs are currently entrenched within very clear and strong medium-term trends (uptrend on EUR/USD, downtrend on USD/JPY, downtrend on USD/CHF, downtrend on USD/CAD, and uptrend on AUD/USD), the overall trend on GBP/USD is presently unclear. For more technical analysis on this currency pair, please click here for Wednesday’s (10/21/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX

Price action on EUR/USD, a daily chart of which is shown, has just reached a new 14-month high, and has stalled around yet another resistance level (just under the 1.5000 price region), within the context of a strong continuing uptrend. This uptrend is framed by a clear parallel uptrend channel that has been firmly in place since the March lows. The overall trend and directional bias continue to be bullish, although the short-term uptrend since the beginning of this month has been excessively steep. For more technical analysis on this currency pair, please click here for Tuesday’s (10/20/2009) Chart of the Day.

- James Chen, CTA, CMT

* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.

* Follow my intraday forex updates on Twitter: http://twitter.com/JamesChenFX