What if there was a low risk way to sell near the top or buy near the bottom of a trend? What if you were already in a long position and you could know ahead of time the perfect place to exit instead of watching your unrealized gains, a.

What if you believe a currency pair will continue to fall but would like to short at a better price or a less risky entry?

In a nutshell, divergence can be seen by comparing price action and the movement of an indicator. You can use RSI , MACD , the stochastic , CCI, etc.

This makes the risk on your trades are very small relative to your potential reward. Price and momentum normally move hand in hand like Hansel and Gretel, Ryu and Ken, Batman and Robin, Jay Z and Beyonce, Serena and Venus Williams, salt and pepper…You get the point. If price is making higher highs , the oscillator should also be making higher highs.

Trading divergence and convergence in Forex

If price is making lower lows , the oscillator should also be making lower lows. If they are NOT, that means price and the oscillator are diverging from each other.

Divergence trading is an awesome tool to have in your toolbox because divergences signal to you that something fishy is going on and that you should pay closer attention.

9 Rules for Trading Divergences - yzyjifoh.web.fc2.com

Using divergence trading can be useful in spotting a weakening trend or reversal in momentum. Sometimes you can even use it as a signal for a trend to continue! In this grade, we will teach you how to spot these divergences and how to trade them.

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