Metatrader 4 Indicators: Divergence and Hidden Divergence
Difference between Normal and Hidden Divergence
Normal Bullish Divergence: usually occurs in a down trend when new lows in the price do not result in a new low in the indicator. This signifies that the prevailing downward trend is weakening and a trader should look for other possible signs of a pending reversal to the upside.
Normal Bearish Divergence: usually occurs in an up trend when new highs in the price do not result in a new high in the indicator. This signifies that the prevailing upward trend is weakening and a trader should look for other possible signs of a pending reversal to the downside.
Hidden divergence appear when the technical indicator shows a new extreme, but the corresponding price action does not.
Metatrader 4 Divergence Indicators based on unique algorithm.
How to use Normal and Hidden Divergence
While regular divergence often indicates trend reversals, hidden divergence tends to be a continuation indicator that shows when an opportunity to take advantage of a pullback in a trend may exist. This means that a trader can now choose to enter the market in the direction of the trend to profit from its continuation.
This entry was posted on Wednesday, July 20th, 2011 at 10:18 pm and is filed under forex indicator, metatrader 4 indicators, metatrader indicator, mt4 indicators. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
