Understanding Divergence

1.One of the most useful things when using secondary indicators is divergance.

2.Divergance can be seen using various indicators such as RSI, MACD, Stochastic, and OBV.

3.You can skim through this chapter and then look at the supplementary indicators and come back and read the content when a divergence appears.

Divergance Definition

● The dictionary meaning of divergance means difference, separation, divergence, etc.

● Most indicators follow prices, so they rise when the price rises and fall when the price falls.

● However, there are cases where they often move in the opposite direction, and the separation, difference, and divergence, of the movement of stock prices and indicators is defined as divergence.

● Divergence can be defined in may ways, but there are generally three types of divergance that appear frequently and are reliable. In facrt, one type can be said to be equivalent to the other, so it can be broadly remembered as two types: general divergence and hidden divergence.

● There are many other definitions that can be defined, but since they do not come out well in prctice or are not reliable, I will only introduce three.

● Each divergence is divided into upward divergence and downward divergence, and upward divergence implies a transition to an upward trend in the futures, and downward divergence suggests a transition to a downward trend in the future.