Divergence Trading With Oscillators
A 1-minute lesson from the MarketPro academy, one of 24 in trading strategies.
Divergence occurs when the direction of price and the direction of an oscillator, such as RSI or MACD, disagree — for example, price makes a new high while the oscillator makes a lower high. This mismatch is often watched as an early hint that the current trend's momentum is weakening.
Divergence occurs when the direction of price and the direction of an oscillator, such as RSI or MACD, disagree — for example, price makes a new high while the oscillator makes a lower high. This mismatch is often watched as an early hint that the current trend's momentum is weakening.
Types Of Divergence
- Regular divergence — price makes a new high/low that the oscillator does not confirm, sometimes read as a possible reversal signal
- Hidden divergence — price makes a shallower high/low than before while the oscillator makes a more extreme one, sometimes read as a sign the existing trend may continue
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Lesson 24 of 24 in Trading strategies
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