Glossary

Back
Divergence
This is a disparagement. It occurs when the price reaches a new maximum or minimum value, and technical indicators in the terminal (different line-mates) do not show that new high or low, when they don't confirm price movement. This is because the technical indicator (see) often shows the trader as the only main force of price movement. But this discrepancy can be used to your advantage. For example, you see a "bullish" divergence: the price chart literally soared to a new high and the indicator has not yet responded to this maximum. Then you can draw the conclusion that very soon the price will reverseand go sharply back down. It turns out that the "bulls" (see), by committing a large number of transactions for purchase, are pushing the price up, but their forces are insufficient for a complete rise. From this it follows that the price chart will drop down. To find out more about trading with technical indicators, more information can be found in chapter 8 of the book “Intuitive Trading” by Nikolai Ludanov.

Back to list

Citadel of Trading