Learn Institutional Trading Part-10

What is Divergence?

Divergence occurs when the price of a stock and an indicator (like RSI, MACD, or momentum indicators) move in opposite directions. It is often considered a warning that the current trend may be losing strength.

Types of Divergence

Regular Divergence:

Indicates potential trend reversal.

Example: Price makes a new high, but RSI makes a lower high.

Hidden Divergence:

Indicates trend continuation.

Example: Price makes a higher low, but RSI makes a lower low.

How to Use Divergence

Combine with support and resistance levels.

Confirm with volume and candlestick patte