Trading 101 - Divergences
A Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator. Often they indicate a change in trend direction and can be used as a powerful piece of technical analysis. Divergences can be found on all time scales of price charts, however, often the most powerful trend movements are seen on the daily and weekly charts. There are two types of Divergences, both can be bearish or bullish.
1. Regular Divergence
Bullish - Price (Lower, Low) Oscillator (Higher, Low)
Bearish - Price (Higher, High) Oscillator (Lower, High)
2. Hidden Divergence
Bullish - Price (High, Low) Oscillator (Lower, Low)
Bearish - Price (Lower, High) Oscillator (Higher, High)
Sources:
https://www.investopedia.com/terms/d/divergence.asp
https://www.mql5.com/en/forum/38303
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