"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."
Comment
⋅
There's also a bit of bullish divergence as well.
[B]What is a bullish divergences?[/B]
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.
"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."
we haven't dipped too terribly low. If anything this is to be expected. More important than the idea, if you plan on playing this, is watching if it breaks out of the pennant that's formed.