technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Will history repeat itself in this case? . In gold seems A Bearish Divergence in volume .
What is Divergence?
Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction.
There is positive and negative divergence. Positive divergence indicates a move higher in the price of the asset is possible. Negative divergence signals that a move lower in the asset is possible.
1)Divergence can occur between the price of an asset and almost any technical or fundamental indicator or data. Though, divergence is typically used by technical traders when the price is moving in the opposite direction of a technical indicator.
2)Positive divergence signals price could start moving higher soon. It occurs when the price is moving lower but a technical indicator is moving higher or showing bullish signals.
3)Negative divergence points to lower prices in the future. It occurs when the price is moving higher but a technical indicator is moving lower or showing bearish signals.
4)Divergence isn't to be relied on exclusively, as it doesn't provide timely trade signals. Divergence can last a long time without a price reversal occurring.
5)Divergence is not present for all major price reversals, it is only present on some.
Limitations of Using Divergence
As is true with all forms of technical analysis, investors should use a combination of indicators and analysis techniques to confirm a trend reversal before acting on divergence alone. Divergence will not be present for all price reversals, therefore, some other form of risk control or analysis needs to be used in conjunction with divergence.
Also, when divergence does occur, it doesn't mean the price will reverse or that a reversal will occur soon. Divergence can last a long time, so acting on it alone could be mean substantial losses if the price doesn't react as expected.
Be successful and profitable.
What is Divergence?
Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction.
There is positive and negative divergence. Positive divergence indicates a move higher in the price of the asset is possible. Negative divergence signals that a move lower in the asset is possible.
1)Divergence can occur between the price of an asset and almost any technical or fundamental indicator or data. Though, divergence is typically used by technical traders when the price is moving in the opposite direction of a technical indicator.
2)Positive divergence signals price could start moving higher soon. It occurs when the price is moving lower but a technical indicator is moving higher or showing bullish signals.
3)Negative divergence points to lower prices in the future. It occurs when the price is moving higher but a technical indicator is moving lower or showing bearish signals.
4)Divergence isn't to be relied on exclusively, as it doesn't provide timely trade signals. Divergence can last a long time without a price reversal occurring.
5)Divergence is not present for all major price reversals, it is only present on some.
Limitations of Using Divergence
As is true with all forms of technical analysis, investors should use a combination of indicators and analysis techniques to confirm a trend reversal before acting on divergence alone. Divergence will not be present for all price reversals, therefore, some other form of risk control or analysis needs to be used in conjunction with divergence.
Also, when divergence does occur, it doesn't mean the price will reverse or that a reversal will occur soon. Divergence can last a long time, so acting on it alone could be mean substantial losses if the price doesn't react as expected.
Be successful and profitable.