Hidden Divergence and Regular Divergence

Hidden Divergence

Divergences not only indicate a possible trend reversal,  it can also be used as a potential indicator for a trend continuation. Keep in mind, the trend is your friend, so every time you can get an indication that the trend will  persist, then it is good for you.

The purpose it is called “hidden” is for the reason that it’s hiding inside the current trend.

Hidden bullish divergence take place when price is making a higher low, however, the oscillator is showing a lower low.

This can be  witnessed when the pair is in an uptrend. Once price creates a higher low, look and see if the oscillator does the same. If it does not and makes a lower low, then we have some hidden divergence in our hands.

Finally, we have hidden bearish divergence. This happens when price makes a lower high, but then again the oscillator is making a higher high. By now you probably have guessed that this happens in a decrease. When you witness hidden bearish divergence, probabilities are that the pair will carry on to shoot lower and continue the decrease.

If you are  a trend follower, then you should dedicate some time to see some hidden divergence. If you do happen to see it, it can support you jump in the trend early.

Regular Divergence

A regular divergence is used as a possible indicator  for a trend reversal.

If price is making lower lows, but the oscillator is making higher lows,  this is measured to be regular a bullish divergence.

This normally happens at the end of a declined. After starting a second bottom, if the oscillators unsuccessfully to make a new low, it is possible that the price will increase, as price and momentum are normally anticipated to move in line with each other.

At the moment, if the cost is making a higher high, but the oscillator is lower high, then you have a regular bearish divergence.

This kind of divergence can be established in an uptrend. Once price makes that second high, if the oscillator makes a lower high, then you can possibly anticipate prices to reverse and decline.

The oscillators indicate to us that momentum is beginning to shift and although price has made a higher high or lower low, probabilities are that it will not be constant.

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