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Trading Divergences
Divergences are a great way to determine tops and bottoms of trends, and thus making the right decision on when to enter and exit a position. In this regard, divergences are actually a leading indicator of future price action!
Normally, both the price and the technical indicator should move in the same direction. A divergence in forex occurs when the price and the indicator fail to simultaneously make higher highs or lower lows, i.e. they are „diverging“ one from another. You can use any indicator for spotting divergences, like the RSI, MACD, stochastic and so on.
www.forextips.com
Divergences are a great way to determine tops and bottoms of trends, and thus making the right decision on when to enter and exit a position. In this regard, divergences are actually a leading indicator of future price action!
Normally, both the price and the technical indicator should move in the same direction. A divergence in forex occurs when the price and the indicator fail to simultaneously make higher highs or lower lows, i.e. they are „diverging“ one from another. You can use any indicator for spotting divergences, like the RSI, MACD, stochastic and so on.
How to Trade Divergences in the Forex Market | ForexTips
Regular divergences are used to spot a possible trend reversal, and can be further divided into bullish and bearish regular divergences.
www.forextips.com
