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Divergence is a concept that describes either a possible price reversal or price continuation. (depends on the type of divergence) 📌
A seta is formed when price moves in the opposite direction to an oscillator indicator such as RSl, MACD or Stochastic.
Types of divergence:
➖Classic or regular divergence
➖Hidden Divergence
➖Extended divergence
➖Classic divergence is the most common divergence; it occurs during a trend reversal.
➖Hidden Divergence - known to traders who use regular divergence.
➖Hidden divergence is a sign of trend continuation.
➖Extended divergence - is also a sign of trend continuation. Few people know about this type of divergence.
➖Nevertheless, it is a powerful signal that can be used in trading.
➖Divergence can be perfectly combined with other tools and methods such as trend lines, horizontal key levels, candlestick patterns, etc.
Once you know what to look for, divergence is fairly easy to identify.
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