Understanding Divergence And What It Means (With Example)

I’ve got a killer video today, and it should show cause I normally don’t use the word killer.

While the concept of divergence seems simple, many people are still not clear on how it works or how to actually use it.

Basically with divergence you are comparing the actual price movement with the movement of some indicator (i.e. RSI, MACD). An example of divergence would be the stock going down, while the MACD is increasing. Divergence usually indicates a trend reversal is on its way. In this case, that would mean the stock price should head higher.

In this specific video we will be comparing the MACD with the actual price movement. Learn more about these indicators plus other chart patterns over at Chart Pattern Manifest.

Over the last month or so, I have really started to add MACD to my trading strategy and it has done a good job in securing accurate readings.

Check out the video – Do You Understand How Divergences Work in the Market?