The Dipper Setup

Although there are several confirmation and disconfirmation patterns that are identifiable, one disconfirmation pattern I particularly like occurs at market tops and bottoms when the OBV produces a negative and positive divergence respectively. This allows an N-OBV (or V-OBV) curve to be launched from the highest or deepest swing low of the OBV in order to catch the actual price high and low. Here's an illustration of this pattern I call the dipper. Figure 16.6 is a 15m chart of euro September 2010 futures showing a seven-day price uptrend in the lower pane with the highest price high at point (1). In the top pane, the high at point (1) is actually a lower high on the OBV and thus amendable to an N-OBV launched from the OBV's ...

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