Lesson 20: Find signals of divergence on all indicators

Discrepancies are trading signals that can be spotted on most indicators. Once you know how to spot discrepancies on 1 indicators, you know how to do it for all indicators.

The general idea is to identify "behavioral differences" between the graph and its indicator.

When you see that the price aligns a succession of high points aligned upwards and that these same high points are aligned downwards on the indicator, it is then a divergence.

The interpretation of this divergence varies according to the current trend. It is therefore essential not to err on his graphic analysis to correctly interpret the divergences.

There are 2 main categories of divergences, divergences of continuation of trend and divergences of shortness of breath.

Divergences of continuation of trend

Divergence of continuation of uptrend

In the upward trend, when the price is falling higher and higher and the oscillator is aligning these same low points to the downside: Purchase signal (continuation of trend)

Divergence of continuation of bearish trend 

In a bearish trend, when the price is high and the oscillator aligns the same high points upwards: Sales signal (continuation of trend)

Differences in trend shortness

Divergence of shortness of upward trend 

In the upward trend, when the price points high points higher and higher and the oscillator aligns these same high points to the fall: Signal of shortness of the bullish movement

Divergence of shortening of bearish trend

In a bearish trend, when the price is falling lower and lower and the oscillator aligns these same low points upwards: Signal of shortness of bearish movement

Warning! The divergences of trend shortness are not signals of buying or selling against the tendency, these are only signals of shortness to serve to balance your positions on levels of indecision.