Technical analysts can use a variety of strategies to generate intraday stock cash tips and stock option tips. The Divergence Strategy is one strategy that can be used to generate both buy and sell signals.
Divergence refers to the difference between actions of Oscillating indicators such as RSI or MACD. The price action of the underlying financial instruments. There are two main types of divergence: Regular divergence or Hidden divergence. Regular divergence is when the price action moves higher or lower. This indicates a weakness in the price action, which could indicate a trend reversal. However, it does not necessarily mean when. You can either be bullish or bearish if there is a regular divergence.
Bullish and bearish
Bullish divergence occurs in a down-trend if the price action prints lower lows than the oscillating indicator confirms. This indicates a weakness in the downtrend as selling is less urgent, or buyers are emerging. In an up-trend, bearish divergence is when price action makes higher highs than the oscillating indicator confirms. This indicates weakness in the uptrend as buying is less intense while selling is increasing or profit taking is growing.
Hidden Divergence: Bullish Or Bearish
Hidden divergence is when the oscillator makes higher-higher or lower-lower values while the price action does not. This indicates that the trend is still strong and will continue. Hidden divergence is also bullish or bearish, just like regular divergence.
Bullish Hidden Divergence occurs when the oscillator makes a higher-high than the price action during an uptrend correction. This is a sign that the uptrend is strong and can be expected to continue. When the oscillator has a lower low than the price action, this is called a Bearish Hidden Divergence. . This indicates that the selling trend has not declined and is still strong.
Divergence trading strategy
Divergence trading strategy requires that traders pay attention to more than the indicator. They also need to be aware of the price. ProfitAim’s Intraday sure shot stock cash tips states that traders should not use trading indicators without looking at the price. Hidden divergences have the potential to increase your chances of success, providing it finds trades that are in the same direction as the trend. Hidden bullish divergences can be seen in oversold areas during an uptrend. It is recommended that traders use the previous oscillator low to determine whether prices are too high.
We have now seen the most important types of divergences that can occur in price charts and price movements. When all rules are adhered to, trading with divergenced signals can be considered very successful. Divergence trading strategies have a higher success rate than other modern strategies.
Technical analysts at renowned advisory firms such as “ProfitAim” use strategies like “Divergence strategy” to generate precise intraday stock cash tips and stock option tips.