Get started

Divergences

NIFTY MIDCAP DIVERGENCENSE:NIFTY NSE:CNXMIDCAP NSE:CNXSMALLCAP Diverging for couple of days. Ideally the broad market shall start picking up. While Nifty is getting selling pressure near the Highs today. Midcap and Smallcap Index getting buying near support zone. Midcap and Smallcap shall start picking up from here on. The Broader Market Indices must converge with the Mainstream Index Nifty 50. Inter-market Divergence is not sign of healthy trend. Longer the time the divergence prevails it leads to trend reversal. As Nifty and Bank Nifty are near the Highs along with other Indices. Broader Market Indices and stocks shall pick up the trend now.
NSE:NIFTYEducation
by TrendonomicsHD
1
RSI Divergence - Regular & HiddenThe price is moving in parallel channel as can be seen. So suppose once it reaches the lower line/ support, how to verify whether we can go long or we need to short. RSI Divergence comes handy here. We already have one confirmation that since price is moving in a channel and the lower line does seem to be support so it may bounce back.The next confirmation comes from RSI Divergence discussed below. CASE STUDY 1 - RSI Positive Divergence We observe a positive divergence in RSI opposite to negative/downward movement of price. In case of regular positive diveregnce ( where RSI moves upward making higher lows , opposite in direction to price's lower low movement , it is better to take a long position. Well that worked and the price bounced back. Case Study 2 - RSI Hidden Divergence Here as we see a positive hidden divergence where the price is making higher lows and the RSI is making lower lows. No that hidden divergence indicates " Trend Continuation ". So the price kept moving up and up and may move to the upper parallel line. The price may make a downward move once it reaches the upper line. Please correct me if i am wrong.
NSE:DRREDDYEducation
by Shadab_07
4
Divergence Masterclass 2 - Bullish divergenceIn the last thread, we discussed the basics of divergence. In this thread, we are going to learn about the positive divergence a.k.a Bullish divergence. I'll cover it in 3 parts: 1. What is bullish divergence? 2. Types of bullish divergence 3. Subtypes with illustrations So, let's move ahead! What is Bullish divergence? A bullish divergence occurs when prices fall to a new low while the oscillator fails to reach a new low. It indicates that the selling pressure is decreasing and the bulls may soon control the market. Generally, a bullish divergence occurs at the end of a downtrend. Bullish divergence is mainly of 2 types: 1. Classic bullish divergence – In this case, the price and the oscillator always either forms a lower low or an equal low. Considering these cases, the classic divergence consists of 3 subtypes. The classic divergence occurs at the end of a bearish trend and indicates that a trend reversal may occur soon. 2. Hidden bullish divergence – In this, the price forms a higher low, but the oscillator forms a lower low. Hidden divergence occurs during the correction phase of a trend and is a possible sign for a trend continuation. So, combining all the above cases, there are only 4 types of Bullish divergence. You don’t have to memorize the names, it’s just a waste of time. Try to understand the underlying logic. 1. Strong Bullish Divergence. The price makes a lower low but the oscillator makes a higher low. This means that the sellers are not selling at the same momentum i.e. the selling momentum is decreasing. Price: Lower Low(LL) Oscillator: Higher Low(HL) 2. Medium Bullish Divergence The price makes a double bottom, almost the same level as the previous low and the oscillator makes a higher low. This indicates that at the same price levels, the momentum is increasing. Price: Equal Low(EL) Oscillator: Higher Low(HL) 3. Weak Bullish Divergence In a weak bullish divergence, the price makes a lower low but the oscillator has almost the same low levels. This means, even though the price is decreasing, the momentum is intact. Price: Lower Low(LL) Oscillator: Equal Low(EL) 4. Hidden Bullish Divergence The hidden bullish divergence occurs at less frequency as compared to the other types. In this, the price forms a higher low, but the momentum oscillator forms a lower low. This indicates that even at a decreasing momentum, there is enough buying going on to push the price up. Price: Higher Low(HL) Oscillator: Lower Low(LL) Pro Tip: 1. For bullish divergence, we only look at the LOWS . 2. Don’t memorize the cases. Just understand that if the divergence is occurring at the lows, then the price will reverse in the opposite direction i.e. it will go up. Hence, you just have to spot the divergence, regardless of the name. Please leave your feedback, it'll help me to create better content. Cheers!
Editors' picks
BITFINEX:ETHUSDEducation
by johntradingwick
87
Divergence Masterclass 1 - What is Divergence? Hello all, today we are going to learn about divergence. A simple topic, which often confuses the newbies. I'll keep this thread short since this will lay the groundwork for the upcoming threads. Please go through this thread before proceeding to the next threads. Foreward In this thread, I would explain the following as easily and briefly as possible: 1. What is divergence? 2. What are the different types of divergence? Introduction When the price of a stock moves in a certain direction, the momentum oscillator should also move in the same direction. Eg. When the Price makes a higher high(HH), the momentum oscillator should also make a higher high(HH). This is called convergence since both, the price and the momentum are converging in the same direction. In a few circumstances, the momentum oscillator and the price do not follow the same path. This is called Divergence. What is Divergence? When the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, it is called divergence. Divergence warns about the underlying weakness in the current trend. The price may or may not reverse at the exact occurrence of the divergence. Different types of Divergence Broadly, divergence can be classified as a positive and negative divergence. The positive divergence is also known as the Bullish divergence, while the negative divergence is called a Bearish divergence. 1. Bullish divergence/Positive divergence Positive divergence signals that the price could start moving higher soon. It is of 2 types: Regular Bullish divergence Hidden Bullish divergence Some illustrations of Bullish divergence: 2. Bearish divergence/Negative divergence Negative divergence signals that the price may soon start falling to lower levels in the future. It is of 2 types: Regular Bearish divergence Hidden Bearish divergence Some illustrations of Bearish divergence: Conclusion: I hope you may have got a better idea about divergence now. I'll post the next thread explaining bullish and bearish divergence separately as I didn't want to clutter this thread. Useful Tips: 1. You should not rely on divergence solely, as it doesn't provide timely trade signals. 2. Divergence can last a long time without a price reversal occurring. 3. It may NOT play out sometimes. Hence, it is just like any other indicator which has a probability of working out but NOT a certainty.
BITSTAMP:BTCUSDEducation
by johntradingwick
5