it rocks to get in on the trend early?! Regular Bullish Divergence price is making lower lows while indicators are making higher lows. In a nutshell, divergence can be seen by comparing price action and the movement of an indicator. However, this setup does not constitute a divergence. Hmmm, what should we do?
Trading Divergences in Forex How To Trade Divergences in Forex Divergence - Forex Trading Strategies - FX Leaders
When your indicator and price action are out of sync it means that something is happening on your charts that require your attention and its not as obvious by just looking at your price charts. If price is making higher highs, the oscillator should also be making higher highs. We can see from the falling trend line that USD/CHF has been in a downtrend. Classic technical analysis tells us that a trend exists when price makes a higher high but like too often, conventional wisdom is seldom right and usually simplifies things too much. In essence, these indicators are what makes Forex signals possible. When traded properly, you can be consistently profitable with divergences. The divergences, thus, just highlighted short-term consolidation. Higher highs on the RSI do not show a reversal or weakness. Divergences are one of my favorite trading concepts because they offer very reliable high-quality trading signals when combined with other trading tools and concepts. Its called divergence trading. When the RSI value is low, it means that there were more and stronger bearish candles than bullish candles over the past 14 candles; and when the RSI is high it means that there were more and larger bullish candles over the past 14 candles. Such an approach will impact your performance in a big way.
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