Secrets of Winning Forex Strategies

Chart 21.1: Examples of divergence Below, we will look at using the above three uses in RSI to determine the stages of a trend. In the first example, we will use the RSI to help us determine the three stages of an uptrend. In the second example, we will examine the downtrend. 1. BEGINNING STAGE Beginning stage of an uptrend At the beginning stage, we tend to see the RSI rising from its oversold position. There may or may not be a bullish divergence warning from the RSI. With the RSI near its extreme value, any change in direction of the trend is usually in the beginning stage. Many times, there can be a divergence warning coming from the RSI as well at the beginning point of a trend.

Chart 21.2: RSI to determine the beginning of an uptrend Beginning stage of downtrend At the beginning stage of a downtrend, the RSI tends to be in the overbought zone or near its extreme value of 70. When we get this type of information from the RSI, it is usually near the start of a downtrend. There may or may not be a bearish diver- gence warning given by the RSI.

Chart 21.3: RSI to determine the beginning of a downtrend

2. MID-TREND STAGE At the mid-trend stage, we can use the RSI centerline as a gauge. As a RSI reading of 50 is the mid-point between the two extreme values of 30 and 70, when the RSI is at its centerline, we can identify the price at its mid-trend. At this stage, if you spot a trend and intend to jump right in, looking at the RSI would help to confirm if there is still potential left for you to jump into the trend. Although you have missed a portion of the trend, it is still not too late to rush in. There is still another part of the trend to profit from. Chart 21.4: RSI to determine the mid-trend stage In Chart 21.4, we show the mid-trend stage for first the uptrend, and then later in the chart, the mid-point for the downtrend.

3. ENDING STAGE At this stage, it would be too late to jump in. At the ending stage, there will usually be a divergence warning from the RSI. This divergence is a warning that the trend is near the end and a reversal can be around the corner. This is how the RSI can warn you not to jump into the ending stage of a trend. Chart 21.5: Using RSI to determine the end of an uptrend End Stage of a Downtrend Toward the end stage of a downtrend, the RSI will be close to its extreme point or in its oversold zone. When you encounter this type of scenario, it is not advisable to enter the trend at this stage. The downtrend is near the end and could be prone to a reversal. This is how the RSI can warn you not to jump into the ending stage of a trend.

Chart 21.6: Using the RSI to determine the end of a downtrend In Chart 21.7 below, we show the same chart that has been used earlier to illustrate the RSI usage in determining the trend. This time, instead of showing the various stages individually, we opt to combine all of them into the one following example.

Chart 21.7: Example of the RSI in action As you can see from Chart 21.7, the trend will start when at the extreme value or oversold zone of the RSI. When the trend reaches its mid-stage, the RSI would have reached the centerline. When the RSI is at the overbought zone, it is the end stage of an uptrend but also the beginning stage of a downtrend. In the example, it happens that when one trend ends, another trend starts. Some- times, this may not be the case. When an uptrend or downtrend ends, the price could go into a sideways movement for a period of time before another trend (uptrend or downtrend) begins. Another indicator that is helpful in determining the stages of a trend is the MACD indicator. Basically, it performs its function almost the same way as the RSI, which we looked at earlier in this section.

WHAT IS THE MACD INDICATOR? The moving average convergence/divergence indicator was discovered by Gerald Appel. It makes use of the exponential moving average in its construction. Two lines are created and plotted against each other, and buy and sell signals are generated. The two lines are: 1. The MACD Line The MACD line is the difference between the two exponential moving averages. The recommended value is 12 periods for the faster exponential moving average and 26 periods for the slower exponential moving average. When the MACD value is positive, it means that the shorter periods’ EMA is above its 26 periods’ EMA. This would mean an uptrend is in motion. If the value is negative, it means a downtrend is in place. As the gap between the 12 and 26 periods widens, it means that shorter term is moving away from the longer term EMA. It also means that the short-term trend is getting stronger. 2. The Signal Line The signal line is a nine-period exponential moving average of the MACD line. The signal line acts as a trigger. When the MACD line crosses the signal line it triggers a buy or sell signal. The MACD has three usages, which are: 1. Signal Line Crossover When the MACD and signal line crossover, this is usually in the early part of the trend, especially when it occurs with a change in direction as shown by the price action.

2. Zero Line Crossover As the zero line lies between the overbought and oversold extreme, a crossing of the zero line can be considered as the mid-point of the trend. 3. Divergence With the MACD in either the overbought or oversold condition, when the MACD does not follow the price in making a new high or low, we have a divergence warning about a top or bottom in the process of forming. The theory of divergence is the same as in RSI. This is due to the price momentum slowing down during the climb or descent, which is captured by the MACD indicator.

Chart 21.8: The three usages of MACD How can the three usages of MACD help to determine the different stages of a trend? We will first show you how to use the MACD to determine the stages of an up- trend, and later, another example on how to use the MACD to determine the stages of a downtrend. 1. Beginning Stage When the MACD and signal line cross over each other, it is usually at the beginning of a trend. There may be some false crossovers, but usually the percentage is high

for success. We can use this MACD/signal crossover as a guide to determine the beginning stage of a trend. It is best when we get a reversal signal from candlestick patterns or chart patterns. 2. Mid-Trend Stage When the MACD line crosses the zero line, it is usually in the mid-stage of a trend. We will use this zero line crossover as a guide for entry into a trend. We may have missed a portion of the trend, but the zero line will tell us it is only the halfway mark and there is still opportunity and profit to be harvested. As long as the MACD has just crossed the zero line or is near to the zero line, we can look to enter an ongoing trend. Chart 21.9: Using MACD to determine the beginning of a trend

Chart 21.10: Using MACD to determine the mid-trend stage 3. Ending Stage Divergence usually occurs at the end of a trend. There is a loss of momentum in price action, which is captured by the MACD indicator. This is a warning that the trend is near the end and it would be better for us to avoid jumping into the trend. It will be better to wait for a reversal signal to enter the currency pair in the opposite direction. This is a time to avoid entering the current trend.

Chart 21.11: Using MACD to determine the end of a trend Example of MACD in a downtrend In the ealier example, you learned how to apply the MACD to determine the stages of trend in an uptrend. In another example, we will show you how to apply the MACD to determine the stages of a trend in a downtrend. The application is actually very similar, just in the opposite direction. When the MACD line crosses the signal line and moves lower, it signifies the start of a downtrend. When the MACD line crosses over the zero line into the negative zone, it means we are at the mid-stage of the downtrend. At the end stage of the downtrend, we get bullish divergence signals from the MACD indicator. This is a warning to us that the downtrend is coming to an end soon. At this stage it would not be wise to enter the trend.

Chart 21.12: Using MACD to determine the stages of a downtrend What is the Bollinger Band? One indicator that is effective in spotting the trend at the beginning stage is the Bollinger Band. You can even use it to trade profitably. The Bollinger Band was discovered by John Bollinger back in the 1980s. Before the discovery of the Bollinger Band, upper and lower lines were placed on the price line to create a band. This envelope was created based on a certain percentage placed on the moving average. For the upper band above the moving average, a certain percentage was added to the moving average, while for the lower band a certain percentage was deducted from the moving average. These three lines formed the moving average envelope or

band. The shortcoming is that the three lines are static and not dynamic. The upper and lower bands are always at a certain fixed percentage away from the moving average regardless of trending or non-trending market conditions. The same applies when the market is quiet and when it is volatile. John Bollinger came up with his version of the band, which will adapt itself to market conditions. In a quiet market, the Bollinger Band will tighten, and when market volatility increases, the band will widen. If there is a sudden price movement, the Bollinger Band will suddenly “explode” as well. The recommended parameter for the Bollinger Band is 20 periods for the middle band, which is essentially a simple moving average. For the upper and lower bands, a standard deviation of two is usually recommended. A standard deviation of two would mean that 95% of the price movement should be contained within the upper and lower bands. Bollinger Band Breakout One way to use the Bollinger Band is to look for the breakout. When the upper and lower band goes into a tight and narrow range, it can be followed by a breakout in either direction. When that break comes, it indicates that a short-term trend is evolving and the price will continue to move in that direction. When there is a tight and narrow band preceding the breakout, the accuracy of that breakout succeeding is higher.

Trading with the Bollinger Band indicator In the chart 21.13, we would be waiting for the Bollinger Band to tighten. When we encounter a price when the band is tight and narrow, we would be on the watch out for a break in the band. We will not know which direction the break in the band will be until the break occurs, but we will be on standby mode, waiting for an oppor- tunity to get in when the signal arrives. Once the break comes, we will sell on the break of the lower band, as indicated in the chart 21.13. Chart 21.13: Using the Bollinger Band

Once we enter into a short position, our stop loss will be at the high of the tight band. We will be on the lookout for the price to re-enter the band again as a signal to cover our short position. This usually does not last longer than seven candles. If this is happening on a five-minute chart, it would take only 30-35 minutes. That is all it takes for you to capture and profit from this set-up. Chart 21.14: A trading example using the Bollinger Band In the chart 21.14, by the seventh candle, the price has re-entered the band and it is time for us to cover back on our short position. The example illustrated the use of the Bollinger Band on a downtrend breakout. In the next example, we will use the Bollinger Band on an upside breakout in trend.

In the chart 21.15, the price was moving in a sideways movement before the breakout at 1.5790. The breakout also signifies the start of a new uptrend in price. After we enter into a position at the 1.5790 breakout, we can place a stop loss at 1.5760, which was the sideways movement’s lowest point prior to the breakout. We will look to cover our position once the price moves back into the Bollinger Band. 35 minutes after our entry, the price moves into the band and we close our position for a profit of 50 pips. Chart 21.15: Using the Bollinger Band to enter at the beginning of an uptrend



PART 2.2 Trading the Uptrend SMOOTH UPTREND Chart 22.1: Example of a smooth uptrend in progress The chart 22.1 is an example of a smooth uptrend, climbing with very little pullback along the way. When we encounter this type of trend, how do we trade? What technical indicator can we use to trade this type of trend?

Using a Technical Indicator When encountering this type of trending, what would be a good indicator to use? We can use a moving average to help us trade this type of trend. When using a moving average for this type of smooth trend, we could choose a medium parameter for the moving average. Chart 22.2: Trading example of a smooth uptrend In this example, we will be using the moving average as a support, which will help us determine the level and entry into the market. In this case, we will use a 20 period moving average as shown in the chart above. When we have the moving average, how are we going to trade it?

From the chart 22.2, we get the USD/CHF in an uptrend. The uptrend is plain smooth sailing. The uptrend started around midnight. Using the moving average indicator with a parameter of 20, we see the price moves near to the moving average indicator just before 0200 hours. That is an opportunity to enter the market. Following the moving average indicator, we enter into a long position on the USD/CHF around 1.0150. Once we are in the position we would wait for the moving average to turn before we get out of our position. That happens after 0400 hours, and we exit our long position just below 1.0190. UPTREND WITH MORE AND DEEPER PULLBACKS The chart below is an example of what I would call a currency pair in an uptrend with more pullbacks while climbing higher. From 1400 to 1600 hours, the pullback was deep, correcting the price to almost where it started its climb. After that, while the price is steadily climbing higher, there are deep pullbacks along the way. When faced with this type of trading market, what would be a good strategy or technique to get us into the market?

Chart 22.3: Example of an uptrend with more and deeper pullback Choosing a Technical Indicator We could use the moving average just the way we use the moving average for a smooth uptrend. However, we need to change the parameter of the moving average. This change in parameter is to account for the deeper pullback that tends to occur in this type of scenario. While keeping to the medium speed parameter, we would choose a parameter of 40 periods for this type of uptrend with deeper pullback. What is the reason for choosing a 40-period moving average as opposed to a 20-period moving average for this type of scenario? When using the smaller parameter (e.g. 20 periods) for a moving average, in trading the smooth uptrend,

we need a 20-period parameter due to the shallower price dip. A shorter period moving average tracks prices faster and keeps you closer to the price action, enabling you to catch the shallow price dips. However, in an uptrend when the pullbacks are deeper, using a longer moving average would be better. If we were to use a smaller parameter (e.g. 20 periods), the price will tend to overshoot the mov- ing average, and this will lead us to cut our long position if the price overshoots the moving average used. By using a 40-period parameter, a slower moving average will be slower and allow the price to fall much more before reaching the moving average. In this case, we will not experience the price overshooting below the moving average, causing us to panic and dump our position.

TRADING A SMOOTH UPTREND WITH MORE PULLBACKS WITH A SLOWER MOVING AVERAGE Chart 22.4: Example of a smooth uptrend with a slower moving average When we encounter this type of scenario, how do we trade this type of trend with a moving average? When the price goes back to the moving average, we will attempt to buy. We will place a stop loss at the previous low. We will look to take profit when the price goes back to the previous high before the pullback to the moving average.

Trading Example With the Moving Average In the chart 22.5, we will buy when the price pulls back to the moving average at 0.7571. Our stop loss will be at 0.7559, as that was the previous low. Our take-profit target will be at 0.7585. After our purchase at 0.7571, there was a bigger than expected pullback to 0.7566, but our position is safe with our stop at 0.7559. The price recovers and gradually moves higher to our profit target at 0.7585, and we are out for a profit of 14 pips. Chart 22.5: Trading example 1

In fact, we could repeat this process all over again a few times as prices move higher and pull back along the way. Below is another example. Let us see if we can repeat this trading with the same chart from 1800 to 2200 hours. Another buying opportunity comes at 0.7582 just before 1900 hours and price target objective was reached in a matter of 15 minutes later as can be seen in chart 22.6. Chart 22.6: Trading example 2

TRADING THE BULLISH FLAG IN AN UPTREND As explained in part one earlier, flags are a common sight in an uptrend. Flags are a common sign in EUR/JPY. In the chart 22.7, there were two flags in that uptrend, which lasted four hours. When you encounter this type of flag pattern, how can you take advantage of it? Chart 22.8 is an example on how you can trade the bullish flag pattern. Chart 22.7: Bullish flag Bullish Flag Trading Example When you encounter a bullish flag pattern, wait for the trigger. The trigger happens when the price breaks above the upper downtrend line of the flag, as shown in the example above. The break of the upper downtrend line happens at 155.58.

The stop loss for this pattern is just at the low of the flag, at 155.53. The profit target is the length of the flagpole, which is 26 pips (155.61-155.35). You should add these 26 pips to the low of the flag pattern, which is also the stop loss, to obtain the take-profit objective at 155.79. Chart 22.8: A trading example of a bullish flag

Chart 22.9: Bullish flag enlarged TRADING A BULLISH PENNANT Sometimes, in an uptrend, instead of a flag, we will get a bullish pennant. Other than a difference in shape, the rest of the trading principle is the same. Entry is on confirmation of the pennant. The trigger is when the price breaks above the upper downtrend line of the pennant. The stop loss is at the low of the pennant, and the profit projection is the length of the flagpole.

Chart 22.10: A Bullish pennant example Your first task is to spot the bullish pennant. Once you spot it, you would wait for the price to move above its upper downtrend line. When you encounter the pennant or the flag, it is usually helpful if you draw a triangle for the pennant and a rectangle for the flag. This will aid you in the breakout. In chart 22.11, once the price breaks out of the triangle, you would look to enter a long position as close to the breakout point as possible. That would be around 156.00. A stop loss can be placed at the lowest point of the pennant triangle at 155.82 after you enter a long position at 156.00.

As for the profit objective, it is calculated from the length of the pennant pole. The pennant pole length is 60 pips (156.05-155.45). You should add the length of the pen- nant pole to the low of the pennant at 155.82 to get the profit objective at 156.42 Chart 22.11: A trading example of a bullish pennant



PART 2.3 End of the Uptrend At this stage, most people are getting rather emotional. Most will be hoping the uptrend does not end so soon in order for them to make a little more in pip terms. Before it rains, there will be dark clouds and strong winds. A volcano usually does not erupt suddenly. Likewise for the uptrend, most of the time it will not turn suddenly; there will be warning signs. We just have to take notice of them. SIMPLE TREND LINE BREAK One of the simplest signs of a change in trend is a simple trend line break. A break of the uptrend line is usually a sign of a change in direction. It signifies a reversal in trend direction and the way for traders to go in the new direction. TRADING WITH A TREND LINE When we have a trend line in place, we will be on the lookout for a break of trend lines. In the example below Chart 23.1, a break of the trend line occurs after 0300 hours. Once the price breaks the trend line, it is time to short the EUR/JPY. When you have a short position, a stop loss needs to be placed. The stop loss could be placed at the previous candlestick before the breakout candlestick high. This will keep the stop loss small, and if it is a false break, the loss will not be large and painful.

As for the profit objective, look for the previous strong support level to cover your short position. Two suggestions are offered in the Chart 23.1. Both points are good support, and either one would be a good point to cover back our short position. Chart 23.1: A break of the uptrend line signals the end of an uptrend END OF UPTREND CANDLESTICK REVERSAL PATTERNS In part one, we mentioned many candlestick patterns that tend to appear at the end of the uptrend and tend to signify a reversal in trend direction. In this section, we will take a look at these candlestick patterns again. We will teach you how to trade these candlestick patterns and highlight to you where to sell, place a stop loss, and look to cover back your open position with trading examples. For the definition of the candlestick pattern itself, you may want to refer back to part one of the book.

Important Note: When trading candlestick patterns, we will need to wait for the last candlestick of the pattern to close. Do not try to anticipate the pattern. As you are trading realtime, the latest candle will keep changing. Only when the last candle finally closes can we be sure of the candlestick pattern. Once the pattern is confirmed, look to enter near the opening price of the next candlestick. For candlestick patterns, the pattern will tell you when and where to sell, and where you can place your stop loss, but candlestick patterns do not give you a price target. For profit taking, we suggest you use the previous strong price support as your profit target and use that point to cover your short position. 1. Hanging Man The hanging man pattern is a simple single candlestick pattern, but it is highly accurate in its prediction. The beauty of trading this pattern is that you get a great reward with only a small risk. You get to sell near the top, and since it is a major reversal, the movement will be great and thus it will give you a great profit in pip terms.

Trading the Hanging Man Pattern Look for the set-up, and in this case, it is the hanging man candlestick. Once the candlestick pattern is formed, the next candlestick is the place to sell. Sell the next candle after the hanging man pattern, and as close to the opening price as possible. In chart 23.2, it would be 2.1538. For a stop loss, you should place your stop loss at the high of the previous candlestick prior to the hanging man pattern. That would be 2.1550. For your profit target, the candlestick only tells you when to get in but not when to get out. You can wait for the next candlestick reversal pattern or another candle-stick pattern to get out. Another recommendation is to use the strong support point to get out of your short position taken from the hanging man pattern. 2. Bearish Engulfing This is a double candlesticks pattern. The first candlestick is a small white candle, while the second candlestick is a large black candle that completely engulfs the previous candlestick. This pattern is just as common and accurate as the hanging man.

Chart 23.2: Hanging man reversal pattern Trading the Bearish Engulfing Pattern When you encounter this double candle pattern set-up at the next candle, you can sell and enter into a short position. Similar to the hanging man, try to sell as close to the opening price of the next candlestick as possible once you confirm the bearish engulfing pattern.

Chart 23.3: Bearish engulfing pattern For a stop loss, you can place it at the previous high prior to this bearish engulfing pattern set-up. This high may not be the prior candlestick but can be a few candlesticks away prior to the bearish engulfing pattern set-up. You can look for the previous strong support as your profit target.

3. Evening Doji Star The evening doji star is formed by three candles. The first candle is a white body. The second candle is a doji, while the third candle is a large black candle that covers at least 50% of the first candle. This triple-candlestick pattern is another common sight and is highly accurate in its prediction. Trading the Evening Doji Star When we encounter this triple-candlestick pattern, we will look to sell as near to the opening price as possible of the next candlestick. In chart 23.4, we will look to sell as close to 106.43 as possible. We can place a stop loss at the high of the middle candle of this evening doji star pattern itself. That would be at 106.53. For your profit objective, you can look to cover back your position at the previous strong support.

Chart 23.4 Evening doji star 4. Evening Star This pattern is very similar to the evening doji star. The difference is in the middle candle of these two patterns. One is a doji, while the other is not, and the name gives you the hint. The way to trade the evening star is the same as the evening doji star.

Trading the Evening Star We will look to sell once the pattern is confirmed. In chart 23.5, we will sell at the opening of the next candle. In the example below, the rate is 1.4537. Our stop loss is placed at 1.4546, which is the high of the middle candle in this pattern. The profit objective is at the previous support point. In this case, we place our take profit order at 1.4510. One can argue that 1.4528 is also a previous support. Yes, that is not wrong, but it is too close, and being a reversal pattern, we would expect the price to move much more. 5. Bearish Harami Cross In this pattern, there are two candles. The first candle has a long white body, while the second candle is a doji. This doji is contained inside the first candlestick.

Chart 23.5: Evening star

Trading the Bearish Harami Cross When you encounter this candlestick pattern, you can look to sell the opening of the next candle. In chart 23.6, we will look to sell at 107.38. The stop loss can be placed at 107.43. For your profit target, we will look to the previous strong support or resistance turned support to cover back our short position. Chart 23.6: Bearish harami cross

6. Shooting Star The shooting star is a single candlestick that looks like an inverted hanging man. There is a long upper shadow with a small real body with little or no lower shadow. Trading the Shooting Star Once the shooting star candlestick pattern is confirmed, we will look to sell at the next candlestick as close to the opening as possible. In the GBP/JPY example in chart 23.7, we will look to sell around 208.20. The stop loss would be at the high of the shooting star, which is at 208.38. For the profit taking part, we can look for previous strong support to cover our short position. In the example, around 2020 hours, a hammer appears, and that can be the trigger for us to cover our short position.

COMBING CANDLESTICK PATTERN WITH TECHNICAL INDICATORS Candlestick patterns can be traded alone. These patterns can also be combined with a technical indicator to confirm the pattern potency. We can use either a RSI or MACD to confirm the candlestick patterns. For end-of- up-trend candlestick patterns, toward the terminal stage of the uptrend, there can be a divergence warning between the price and the above mentioned two technical indicators, or there could be an overbought market condition. We can use this divergence warning to confirm the candlestick pattern. If one is good enough, two should be better. That is the advantage of using indicators to confirm the candle- stick pattern.

7. Spinning Top This is a double-candlesticks pattern. The body of both candles is small with an upper and lower shadow that is longer than the body itself. The colour of the bodies does not matter. Trading the Spinning Top In this spinning top example, in chart 23.8, we have chosen to use a RSI indicator. When the spinning top pattern appears, there was an overbought market condition as indicated by the RSI. This helps to confirm an end-of-uptrend situation. We can look to sell the next candle once we see the spinning top pattern. In this case, we will sell at 1.9515. We will place our stop loss at 1.9532. Our stop loss is placed at the highest point of the rally. Our profit objective will be placed at the previous support, which is located at 1.9477. If you think the price could go lower than 1.9477, you can place your profit target at 1.9440, which is the next strong support point.

Chart 23.8: Spinning top DOUBLE TOP FORMATION One of the most common signs of an end-of-uptrend pattern is the double top pattern. After hitting the high twice, the price is unable to continue moving higher, and this is followed by a drop in price and a reversal in the opposite direction. When faced with this type of uptrend scenario, what can help us to determine if the uptrend is coming to an end?

Chart 23.9: Double top formation An indicator that can help confirm the end of an uptrend with a double top formation is the RSI indicator. Trading the Double Top Pattern In the chart 23.9, when there was a double top formation in the chart, there was a divergence warning on the RSI chart as well. While the price attempts another high, which is about the same high as the first peak, the RSI did not follow suit. The RSI for the second price peak was lower than the first peak. This is a divergence warning of a possible top forming and possible price reversal soon. The RSI helps to confirm our double top pattern.

Once the price falls below the support line at 0.9045, it is time to sell. Once a short position is established, A stop loss can be placed at 0.9060. The price objective for this pattern is equal to the height of the top to the support line. You can deduct this height from the support line to get your price target at 0.9030 (0.9045-.0015). If you think that this price objective is too little for the double top pattern formation, you can use 1.6 times the height of the double top. That would give a price target of 0.9021 [(1.6 × 0.0015) -0.9045]. TRIPLE TOP PATTERN A less common but very reliable pattern encountered in the end of an uptrend is this triple top pattern. This pattern is similar to the double top but there is an additional high in this case. There are three highs approximately around the same level, and the three tops need not be the same point. This is due to the price being unable to penetrate the highs. A good technical indicator to help us in determining the end of an uptrend is the MACD indicator. The MACD indicator provides a bearish divergence signal, and this is the warning sign of an end to an uptrend. The MACD indicator does not in itself give the sell signal; it is used to confirm our view that the uptrend is coming to an end in the form of a triple top pattern. MACD can also be used to confirm a double top formation in the same way as in the triple top. How to Trade the Triple Top End-of-Uptrend Pattern When we encounter this type of pattern, we will have to wait for the price to move below the support line. A break of the support line will confirm the triple top pattern. Looking at the MACD in chart 23.10, we can see that there is a divergence forming