- Divergence occurs when the price of an asset is moving in the opposite direction of a technical indicator, such as MACD or RSI, and can signal potential reversals.
- To use divergence in market analysis, observe for discrepancies between price action and indicator movement to identify bullish or bearish signals.
- Confirm divergence signals with other technical tools or price patterns to increase the reliability of your market analysis.
Been scratching my head on this one for a bit, folks. When it comes to market analysis, how exactly are we supposed to use divergence? Like, say I spot two elements that don't have a consistent correlation - what's the move then? Any thoughts based on personal experience or knowledge?
Divergence is definitely interesting, but I'm a bit wary about using it as a sole indicator. Aren't there times when it can be misleading, like giving false signals or something? Has anyone dealt with that and found a reliable way to filter out the noise?
Oh for sure, divergence can be a tricky beast. False positives are common, especially in choppy markets. That's why it's risky to rely solely on divergence. Gotta use it with other tools to avoid getting burned. You ever run into a situation where divergence led you down the wrong path? How'd you handle it?
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