What is a hidden divergence?
"A hidden divergence occurs when an indicator makes a higher high or a lower low while the price action does not. This often indicates that there is still strength in the prevailing trend, and that the trend will continue. A hidden divergence is used in a similar way to a confirmation pattern."
How can traders use divergences?
"Traders can use divergences as a leading indicator, as it precedes the price action. A divergence comes about because a technical indicator does not agree with the current market price, which means that a change in direction is likely. So, traders can potentially use the divergence pattern to enter and exit trades.
However, it is important to note that the technique does not give a set price point at which to open or close a trade, just an indication of the strength or weakness of the underlying market sentiment."
"A hidden divergence occurs when an indicator makes a higher high or a lower low while the price action does not. This often indicates that there is still strength in the prevailing trend, and that the trend will continue. A hidden divergence is used in a similar way to a confirmation pattern."
How can traders use divergences?
"Traders can use divergences as a leading indicator, as it precedes the price action. A divergence comes about because a technical indicator does not agree with the current market price, which means that a change in direction is likely. So, traders can potentially use the divergence pattern to enter and exit trades.
However, it is important to note that the technique does not give a set price point at which to open or close a trade, just an indication of the strength or weakness of the underlying market sentiment."
What is a bullish divergences?
A bullish divergence is a pattern that occurs when the price falls to lower lows, while the technical indicator reaches higher lows. This would be seen as a sign that market momentum is strengthening, and that the price could soon start to move upward to catch up with the indicator. After a bullish divergence pattern, it is common to see a rapid price increase.