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Divergence

Regular and hidden divergence can signal potential trend reversals or continuations in price trends. Regular bullish divergence occurs in a downtrend when price makes lower lows but the oscillator makes higher lows. Regular bearish divergence happens in an uptrend when price makes higher highs but the oscillator makes lower highs. Hidden bullish divergence takes place in an uptrend, when price makes a higher low while the oscillator makes a lower low. Hidden bearish divergence appears in a downtrend, with price making a lower high and the oscillator forming a higher high. Divergences can be used to predict whether a trend will reverse or continue.

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240 views1 page

Divergence

Regular and hidden divergence can signal potential trend reversals or continuations in price trends. Regular bullish divergence occurs in a downtrend when price makes lower lows but the oscillator makes higher lows. Regular bearish divergence happens in an uptrend when price makes higher highs but the oscillator makes lower highs. Hidden bullish divergence takes place in an uptrend, when price makes a higher low while the oscillator makes a lower low. Hidden bearish divergence appears in a downtrend, with price making a lower high and the oscillator forming a higher high. Divergences can be used to predict whether a trend will reverse or continue.

Uploaded by

zoki47
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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DIVERGENCE

RegularDivergenceisusedasapossiblesignforatrendreversal. If price is making lower lows (LL), but the oscillator is making higher lows (HL), this is considered to be Regular BullishDivergence. This normally occurs at the end of a DOWNTREND. After establishing a second bottom, if the oscillator fails to makeanewlow,itislikelythatpricewillrise,aspriceand momentum are normally expected to move in line with eachother

If price is making a higher high (HH), but the oscillator is lower high (LH), then you have Regular Bearish Divergence. This type of divergence can be found in an UPTREND. After price makes that second high, if the oscillator makes a lower high, then you can probably expect price toreverseanddrop.

HIDDENDIVERGENCE
Divergencesnotonlysignalapotentialtrendreversal;theycanalsobeusedasapossiblesignfora trendcontinuation.Alwaysremember,"thetrendisyourfriend",sowheneveryougetasignalthatthe trendwillcontinue,thatisagoodsignforyou! Hidden Bullish Divergence happens when price is making a higher low (HL), but the oscillator is showing alowerlow(LL). ThiscanbeseenwhenthepairisinanUPTREND.Once price makes a higher low, look to see if the oscillator does the same. If it does not, but instead makes a lower low, then you've got Hidden Bullish Divergence onyourhands.

Hidden Bearish Divergence occurs when price makes a lower high (LH), but the oscillator is making a higher high (HH). By now you've probably guessed that this occursinaDOWNTREND. When you see Hidden Bearish Divergence, chances are that the pair will continue to shoot lower and continue thedowntrend.

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