Many traders that are using technical analysis for their forex strategies are focusing primarily on singles they are giving. But there are also hidden signals in some indicators such as: MACD, RSI, Stochastic, Momentum, and other oscillators. These hidden signals are called divergences. Divergence is one of the most impressive techniques in technical analysis. In forecasting currency movements the more advanced traders are paying much attention to it. Amazing results can be achieved trough to it. The divergence is characterized by the gap between the chart and the indicators, or more precisely the direction of movement of the price and the indicator.
In the last years, more and more traders are paying attention to the divergence. In combination with other techniques can be achieved amazing results and profits.
Divergence Itself gives us clarity of an impending change in the trend or a continuation of the trend. There are two main types of divergences: normal (bullish or bearish) and hidden (bullish or bearish)Normal (negative) divergence:
Bullish divergence - in this type of divergence as it is seen from the chart. Price draws two bottoms, the second is lower than the first, b…
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