Login
Register

Divergence Cheat Sheet

Have you had your fill on learning how to trade divergences?

Let’s review!

Divergence is a popular concept in technical analysis that describes when the price is moving in the opposite direction of a technical indicator.

There are two types of divergences:

  1. Regular divergence
  2. Hidden divergence

Each type of divergence will contain either a bullish bias or a bearish bias.

Since you’ve all be studying hard and not been cutting class, we’ve decided to help y’all out (cause we’re nice like that) by giving you a Divergence Trading Cheat Sheet to help you spot regular and hidden divergences quickly.

Regular Divergence

Regular divergences signal a possible trend reversal.

BiasPriceOscillatorDescriptionExample
BullishLower LowHigher LowIndicates underlying strength. Bears are exhausted. Warning of a possible trend direction change from a downtrend to an uptrend.
BearishHigher HighLower HighIndicates underlying weakness. The bulls are exhausted. Warning of a possible trend direction change from an uptrend to a downtrend.

Hidden Divergence

Hidden divergences signal a possible trend continuation.

BiasPriceOscillatorDescriptionExample
BullishHigher LowLower LowIndicates underlying strength. Good entry or re-entry. This occurs during retracements in an uptrend. Nice to see during the price retest of previous lows. “Buy the dips.”
BearishLower HighHigher HighIndicates underlying weakness. Found during retracements in a downtrend. Nice to see during price retests of previous highs. “Sell the rallies.”

While divergences can occur between price and any other piece of data, they are most commonly used with technical indicators, especially with momentum oscillators. 

Examples of a momentum oscillator include the Commodity Channel Index (CCI), Relative Strength Index (RSI), Stochastic, and Williams %R.

Whew!

That’s quite a lot to remember, isn’t it?

You can write this all down in your palm and look back on it while trading.

But if you’re like Eminem whose palms get sweaty, knees weak, and arms get heavy, when you’re nervous, we wouldn’t recommend this.

You can simply bookmark this page and just revisit it when you mix up those higher lows, lower highs, lower lows, and higher highs.

Do you need help?

We will provide detailed information about our services, trading platform, and top tradable assets. We will answer all your questions within 24 hours.

Let's Connect

© 2023-2024  Apex Invest. All rights Reserved.

Caution: Participation in the trading of leveraged financial instruments, such as Forward Rate Agreements, Contracts for Difference (CFDs), or Market Equities, carries significant risk. This involves the potential loss of your entire invested capital and may not be suitable for all investors. The substantial leverage and volatility associated with these instruments can either work in your favor or against you. Before making any trading decisions, it is crucial to carefully assess your investment objectives, level of experience, and risk tolerance. We refrain from considering your personal circumstances or providing specific recommendations for your trades. When uncertain, seek counsel and guidance from independent experts, including legal, tax, and financial advisors.Terms of Service Privacy Guidelines Refunds & Cancellations Bonus Terms Risk Disclosure AML Policy Your engagement in trading activities with us is contingent upon adhering to our Terms & Conditions and our Privacy Policy, subject to amendments over time. By initiating an account with us, you acknowledge and accept these documents as a legally binding contract. The operation and ownership of the website are under Apex Invest, a global brand dedicated to enhancing your trading journey.For any inquiries, feel free to reach out to our support team via email at [email protected]. Unfortunately, we are unable to accommodate traders residing in The United States, Cuba, Democratic People’s Republic of Korea (North Korea), Iran, and Syria. Additionally, we may decline traders from other jurisdictions.