Abstract:A regular divergence can be seen as a hint of a trend reversal. Bullish and bearish regular divergences are the two forms of regular divergences.
What is the definition of a regular divergence?
A regular divergence can be seen as a hint of a trend reversal.
Bullish and bearish regular divergences are the two forms of regular divergences
Regular Bullish Divergence
Regular bullish divergence is defined as when the price makes lower lows (LL) while the oscillator makes higher lows (HL).
This usually happens towards the bottom of a DOWNTREND.
If the oscillator fails to produce a new low after forming a second bottom, the price is likely to rise, as price and momentum are generally expected to move in lockstep.
A normal bullish divergence is depicted in the graphic below.
Regular Bearish Divergence
You get regular bearish divergence if the price makes a higher high (HH) but the oscillator makes a lower high (LH).
An UPTREND contains this form of divergence.
If the oscillator reaches a lower high after the price makes that second high, you should expect the price to reverse and plummet.
After making the second top, the price flips, as shown in the image below.
The regular divergence is best employed when trying to pick tops and bottoms, as shown in the figures above.
You're looking for a point where the price will come to a halt and then reverse.
The oscillator tells us that momentum is shifting, and that even though the price has hit a higher high (or lower low), it is unlikely to last.
Now that you've mastered conventional divergence, it's time to go on to the next level and learn about hidden divergence.
Don't worry, it's not as well hidden as the Chamber of Secrets, and it's not nearly as difficult to find.
It's dubbed “hidden” because it's hidden within the present trend.
In the following section, we'll go over everything in further detail. Continue reading!
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Divergence in the Shadows
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