Okay bro 🙂 let’s continue the lesson about the next divergence strategy but if there are still those who don’t know what DIVERGENCE is, please see the following explanation first.
On this occasion, we will discuss one type of Divergence Strategy, REGULAR DIVERGENCE, which in principle works as a signal of reversal .
Called a Regular Bullish Divergence when prices form Lower Lows (LL) but the oscillator forms Higher Lows (HL). And this signal occurs at the end of a downtrend. So the simple picture is like this after the price forms the second bottom and the oscillator fails to form the next bottom so it is possible that the price will move up (uptrend) or opposite to the previous direction.
The following is an example of the process of forming the Bullish Divergence Regular signal in question,
Now, if the price forms a Higher High (HH) but the oscillator forms Lower High (LH), a Bearish Regular Divergence signal will form.
We can find this type when prices form an uptrend. After the price forms its second peak and then the oscillator forms Lower High, it is possible that the price will move down (downtrend) or in the opposite direction with the previous direction of movement.
The following is a picture of the formation of a bearish regular divergence in which we can see that the price will start reversal movement after forming the top of both.
Okay … As we have seen above, it can be concluded that regular divergence is very suitable for detecting BUY or SELL signals when the price is below (bottom) or top (top) or the term is used to detect a reversal of movement signals the price of a currency pair after it tends to move down (downtrend) or up (uptrend).
How about it it’s easy to understand whether it’s forex trading with regular divergence! don’t go anywhere first, bro 🙂 we’ll discuss the next lesson, the second type is HIDDEN DIVERGENCE and how we use it.