First, what is divergence?
Divergence shows us that a trend is losing momentum and may soon be ready for a reversal or a deeper correction. When we see divergence, we should stop trading in the direction of the trend and wait for the trend reversal.
How is divergence determined in charts and commodities?
When price moves higher, RSI(or MACD) will show lower tops = Bearish Divergence
Price will make lower lows while MACD and/or RSI will show higher lows = Bullish Divergence
We saw a bearish trend from September to November 2021. Price made higher highs while MACD made lower highs = indicating trend reversal. The price continued to drop above 60%.
Similarly, we recently saw another divergence. Price made lower lows but MACD made higher lows = bullish divergence. Price continued to breakout and breakout is expected to continue.
Divergence shows us that a trend is losing momentum and may soon be ready for a reversal or a deeper correction. When we see divergence, we should stop trading in the direction of the trend and wait for the trend reversal.
How is divergence determined in charts and commodities?
When price moves higher, RSI(or MACD) will show lower tops = Bearish Divergence
Price will make lower lows while MACD and/or RSI will show higher lows = Bullish Divergence
We saw a bearish trend from September to November 2021. Price made higher highs while MACD made lower highs = indicating trend reversal. The price continued to drop above 60%.
Similarly, we recently saw another divergence. Price made lower lows but MACD made higher lows = bullish divergence. Price continued to breakout and breakout is expected to continue.
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Update: First target reached. You can take profits or move limits