Hi, Walter, divergencies are not used in this strategy, as explained in a previous post the DiNapoli indicator works as below.
In addition to its own formula the logic for the DiNapoli indicators is as follows:
if the result value (blue) > signal value (red) and the signal is rising apply the smooth curve formula
if the result value (blue) < signal value (red) and the signal is falling apply the smooth curve formula
Crossover distance - smooth curve formula
This is a calculation for the distance between the result and signal lines to help filter fake crossovers.
The close position setting for the DiNapoli works as follows:
- If the DiNapoli shows a direction change from bullish to bearish, close buy trades.
- If the DiNapoli shows a direction change from bearish to bullish, close sell trades.
The DiNapoli indicator uses the settings for FastK, SlowK and SlowD, but this is only used to calculate the formula, it is not lines drawn on the chart, you only have the result and signal lines (blue and red).
hope that helps.