We all know or divergence to identify trend reversals.
But with the help of Hidden divergence we can find out trend continuation.
Lets start !!
- On 18 April stock is traded 411 and shows the 51.29 reading .
- But it break the and fall further.
- it again renounce back to 411 level but this time shows 68 levels which close to overbought region .
- At present condition we have 412 also.
- So we can Short it with the stop 412 on closing basis .
Only Condition is stock has to be in same trend Down or Up
See the Past example
Divergence is when the price goes in one direction (up, down), the indicator goes in the opposite direction (down/up).
In the above case, the price seems to be equal (or more, say it reached 413.xx) and RSI seems to be moving in the same direction of price.
Where is the divergence here? I am kinda novice technical analyst, I would like to get your opinion on this. Thanks!
In both example price reach at the same level but indicator not , price wise levels are same but overbought levels are different.
That means, Overbought level is more than the previous one. that's the "hidden divergence"
specifically on 23rd April and 11th june (yesterday)?
For more understanding i added another example of LUPIN check that.