Charting and Studies User Guide - CQG.com

Interpretation
Page 547
Each momentum indicator used for divergence has different characteristics and therefore
different trading opportunities. Rsi is a rather sensitive indicator that has a close correlation
with the price action of the market itself. The default settings interpret divergence by isolating a
change in direction of the Rsi or the moving average of Rsi, and at that moment recording the
value of the study itself and the default value of the bar. Divergence is qualified when they
move in opposite directions on a certain number of consecutive occasions. A positive divergence
is revealed by a red line recording a value of one and a blue line a negative signal. This
highlights how the raw code is primarily of use as an exit tool to existing trend following trades.
However, the building of code within the formula tool box enables traders to increase the
accuracy of divergence qualification by focusing on the absolute value of the Studies or |bar
values and creating more exact threshold parameters.
For more information about Trading Time, go to http://www.cqg.com/AdditionalInfo/About-
CQG/Trading-Time.aspx.
Additional study information is here: http://www.cqg.com/Docs/Trading_Time.pdf.
Shaun has also created a helpful video about quantifying divergence. Please go to
http://www.cqg.com/Docs/HelpFlash.swf.
Charting and Studies User Guide