Do oscillator divergence signals work?

First of all, although divergence signals may work on all timeframes, longer-term charts (daily and higher) usually provide better signals. As for entries, once you find a high-probability trading opportunity on an oscillator divergence, you can scale into position using fractionally-sized trades.

What is an oscillator & how does it work?

What Is an Oscillator? An oscillator is a technical analysis tool that constructs high and low bands between two extreme values and then builds a trend indicator that fluctuates within these bounds. Traders use the trend indicator to discover short-term overbought or oversold conditions.

What is an example of a divergence?

The term “divergence” describes a situation when two factors that used to be in phase become out of phase. For example, if price increment is associated with an increase in volume, when there is a price increase with a decrease in volume, you can say there is a divergence between price and volume data.