Dear ST,
Here is a sample 8,3,4 stoch chart (MINIFTY-1 of 11.11.2011).
I have marked the peaks from 1 to 11 and also marked the troughs from A to J.
Now, if I draw a line from Peak-5 to Peak-6 and check for divergence in Price
during that period, such a check looks to be a valid check.
But, if I draw a line from Peak-3 to Peak-4 and check for divergence in Price during
that period, it somehow appears to be an invalid check - but I am not sure.
I am unsure about which peaks are valid for connecting and checking for a
corresponding divergence in Price. Similarly I am also not sure about which
troughs can be validly connected and checked for divergence.
This query may look silly, but I have been suffering from this doubt ever since
I started studying the divergences more seriously than before.
I hope you will post a few lines on this..