Mon. Oct 3rd, 2022

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Regular Divergence

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A regular divergence is employed as a possible sign for a trend reversal. There are two sorts of regular divergences: bullish and bearish.

If price is making lower lows (LL), but the oscillator is making higher lows (HL), this is often considered to be regular bullish divergence. This normally occurs at the top of a downtrend.

After establishing a second bottom, if the oscillator fails to form a replacement low, it’s likely that the worth will rise, as price and momentum are normally expected to move in line with each other.

If the price is making a higher high (HH), but the oscillator is lower high (LH), then you have regular bearish divergence. This type of divergence can be found in an uptrend. After price makes that second high, if the oscillator makes a lower high, then you can probably expect price to reverse and drop.

The oscillators signal to us that momentum is starting to shift and even though price has made a higher high or lower low, chances are that it won’t be sustained.

 

 

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