Bullish & Bearish Technical Divergences
Divergence is a term which often comes back in forex technical analysis, it occurs when the price of the underlying currency pair and the indicator move in opposite directions. A bullish divergence can predict future upturns, while a bearish divergence can predict future downturns. Currency traders make trading decisions by identifying situations of divergence, where the price of a currency pair and indicators, such as the MACD, are moving in opposite directions.
Bullish Divergence
Bullish divergence occurs when the price of the underlying currency pair makes a new low while the indicator fails to make a new low or heading higher suggesting the downtrend may be nearly over. When identifying bullish divergences, a currency trader will look for BUYING opportunities.Bearish Divergence
Bearish divergence occurs when the price of the underlying currency pair makes a new high while the indicator fails to make a new high or heading lower suggesting the up trend may be nearly over. When identifying bearish divergences, a currency trader will look for SELLING opportunities.Risk Disclaimer
“Trading in the Forex market is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. Nothing in this presentation is a recommendation to buy or sell currencies and FXcharles is not liable for any loss or damage.”
“Trading in the Forex market is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. Nothing in this presentation is a recommendation to buy or sell currencies and FXcharles is not liable for any loss or damage.”
