the Easy Way to Use Divergency
Divergence can be identified from the oscillating indicators, the most popular of which are the MACD, Stochastic and RSI. Any of these running on your day trading chart with prices in either candlesticks or bar chart form can be used.
Bearish Divergence
Bearish divergency exists when the price chart is seemingly bullish but the oscillator is showing a bearish trend.
In that particular situation a line across the highest highs of the price chart will be showing a rising trend. If you’re in this market going long, it is time to get out. If you have a signal to open a trade to go long, the divergence is signalling you not to do it. If you’ve got a signal to open a trade to go short, on the other hand, the deflection is confirming that and you can go ahead. Bullish Divergence
Bullish diverging is the other way round.
The signal is the opposite to the previous one. The divergence is signalling the bearish trend is coming to an end so you can close short trades and open long trades if that fits with the other signals of your system.
Of course no system is 100% correct and that applies to using deviation in trading just the same as anything more. Enhance your profits by spotting patterns in deviation from the indicators on your day trading chart.
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