When you are registered
you will be notified every time we publish a new article - You will also get
access to our FREE products including The 3 Little Pigs Trading Strategy -
Divergence In Forex
Uses Price action and an
Oscillator to identify potential turning points in the market.
Classed as “leading”
indicators there are two types of divergence, Regular and Hidden.
Both types use Price
action and an Oscillator (e.g. MACD, Stochastic, RSI) to identify
potential turning points in the market.
Usually when price makes
a Higher High the Oscillator will also make a Higher High, etc. Divergence
occurs when things get out of sync…
Bullish
Divergence
These are setups for
potential LONG trades:
Regular - Price makes a Lower Low,
Oscillator a Higher Low
Hidden - Price makes a Higher Low,
Oscillator a Lower Low
Bearish
Divergence
These are setups for
potential SHORT trades:
Regular - Price makes a Higher
High, Oscillator a Lower High
Hidden - Price makes a Lower High,
Oscillator a Higher High
These different types of
divergence are “setups for potential trades” and should NOT be traded
blindly.
Common tools to assist
trade entry are:
- Chart patterns (Double tops/bottoms)
- Reversal candlestick patterns
- Oscillator moving out of Overbought/Oversold
0 comments:
Post a Comment