What does a divergence pattern mean?

Divergence patterns indicate that a reversal is coming soon and becoming more likely but this is not an instant change. The more divergence there is visible, the more likely a reversal does become. Here are some guidelines: The entry can not be taken on the basis of divergence indicator alone.

What is indicator divergence?

Fig1: Indicator Divergence. What is divergence? Simply said, the word divergence means “separate”. Usually the price of an instrument and indicator follow the same path and direction. This is when the oscillator such as the macd.PRO confirms the trend and traders can expect the trend to continue.

What is divergence in technical analysis?

Divergence in technical analysis may signal a major positive or negative price move. A positive divergence occurs when the price of an asset makes a new low while an indicator, such as money flow, starts to climb. Conversely, a negative divergence is when the price makes a new high but the indicator being analyzed makes a lower high.

What is a positive divergence?

Divergence compares the patterns between the price of an asset and a technical indicator. It is most apparent when the asset price is moving in the opposite direction of what the technical indicator states. Positive divergence signals potential positive uptrend in price momentum, which can be bullish.