Wednesday 22 August 2007

TRIN - Bearish Divergence Pattern

Bearish divergence pattern on the TRIN today. Last week we had a bullish divergence pattern on the TRIN and this resulted in a nice swing to the upside for the Emini. The TRIN is losing steam a little now and the TRIN Oscillator has become over-bought.

TRIN Bearish Divergence Pattern Image

TRIN Bearish Divergence Pattern

The chart above shows Emini daily bars with my adjusted TRIN indicator ("Better TRIN") below. Remember with the Better TRIN indicator, bullish market internals have positive values and bearish market internals have negative values. We've got a higher high on the Emini but the TRIN has weakened - setting up a bearish divergence pattern.

Divergence patterns on the indicator are shown with white dots for bearish and red dots for bullish. You can see how the last TRIN bearish divergence pattern worked out, catching the Emini high of 1,510 before reversing strongly.

TRIN Oscillator Over-Bought Image

TRIN Oscillator Over-Bought

This divergence pattern is also happening while the TRIN Oscillator is in over-bought territory - but yet to turn down. These TRIN signals sometimes are right on cue, sometimes they take a little time to come good.

I've exited my long position and will wait to see what happens next. Interesting to note that the Emini is up over 10 points in after hours trading. Could we get a Larry Williams Oops entry tomorrow morning? We'll have to wait and see.

You can read more about the adjusted TRIN indicators here and how to spot TRIN bearish divergence patterns.

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Filed Under TRIN Indicator

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