Divergence Patterns Forex

Divergence patterns help reveal reversals
There are regular divergence patterns and hidden divergence patterns
Divergence helps identify MAs and trend lines

Divergence Chart Patterns - How Do They Work?

Divergence patterns offer traders a possible sign of the trend continuing or the trend reversing. There are two types of divergence chart patterns:

Regular divergence patterns: used to spot potential trend reversal
Hidden divergence patterns: used to spot potential trend continuation

Each divergence chart pattern can be bullish or bearish. The Forex divergence pattern can be seen on the price chart by adding a divergence indicator on the bottom of the price chart. The most commonly used divergence indicators are the MACD, RSI, CCI, AO, and stochastics (more information later on).

Regular Divergence Chart Patterns

Regular divergence chart patterns can be bullish or bearish. Regular divergence patterns indicate reversals. This is the most commonly known Forex divergence pattern and the divergence Forex meaning that most traders know. Bullish regular divergence patterns reversals:

Price confirms a higher high but the oscillator makes a lower high
This occurs when price action is an uptrend
The pattern suggests that a bearish reversal could take place now or soon

Bearish regular divergence patterns reversals:

Price confirms a lower low but the oscillator makes a higher low
This occurs when price action is a downtrend
The pattern suggests that a bullish reversal could take place now or soon

Regular divergence patterns indicate that:

The trend is losing its momentum
Chances are that the trend is not sustainable anymore
A reversal might take place now or sometime soon

As mentioned, a divergence pattern does not mean that a reversal will take place right away. The trend can continue for quite a while before the actual reversal appears. Traders should therefore always treat it as an early signal when divergence patterns Forex appear. Also, multiple divergence patterns on one time frame or multiple divergence patterns on multiple time frames makes it more likely that a reversal will take place sooner.

Hidden Divergence Chart Patterns

Hidden divergence chart patterns can be bullish or bearish. Hidden divergences are called hidden because they are “hiding” in the trend. Bullish hidden divergence chart pattern:

Price confirms a lower high but the oscillator makes a lower low
This occurs when price action is an uptrend
The pattern suggests that an uptrend continuation could take place now or soon

Bearish hidden divergence chart pattern:

Price confirms a higher high but the oscillator makes a lower high
This occurs when price action is a downtrend
The pattern suggests that a downtrend continuation could take place now or soon

$fractal divergence patterns$ Hidden divergence patterns indicate that:

The correction is losing its momentum
Chances are that the trend will continue
A trend continuation might take place now or sometime soon

Hidden patterns indicate that the trend is not over. It also is an indication the trend is expected to continue now or sometime soon. Hidden divergence chart patterns usually appear less often on the chart than regular divergence chart patterns. Nonetheless, if they do appear, then a trend continuation could be expected on that price chart and time frame.

Divergence Forex Trading Patterns To Follow

Both regular and hidden divergence patterns can be seen on the chart by using a divergence indicator. For Forex divergence trading, most traders use indicators such as:

The AO (Awesome Oscillator)
The MACD
The RSI (relative strength index)
The CCI (commodity channel index)
The stochastic oscillator

These five divergence patterns are probably considered to be the most common divergence indicators within the trading community. But undoubtedly, there are many more available that are not mentioned in this article. Each divergence indicator works differently. But whether it’s the divergence Forex RSI or just the simple MACD, ultimately they have the same ability to show divergence patterns on any price chart on any time frame Double divergence patterns or divergence patterns on multiple time frames increase the probability of a reversal taking place. For trading purposes, however, divergence patterns and divergence indicators are best used in combination with other tools and indicators. This is a better approach than only relying on the divergence indicator itself.

Divergence Trading Strategy - What's The Best One?

As mentioned in the last part, traders usually use divergence trading patterns in combination with other tools and indicators for Forex divergence trading. Divergence trading patterns play a role as part of a larger trading strategy, also divergence trading strategy. Some traders will place a lot of emphasis on divergence patterns within their divergence Forex strategy, others will only give it a minor role. Divergence patterns can used on all time frames and types of trading, whether traders are swing trading or Forex divergence scalping. Traders can use multiple techniques to confirm and trade divergence patterns:

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