FOREX THEORY
Summary: Divergences
Please keep in mind that we use
divergence as an indicator, not a signal to enter a trade!
It wouldn’t be smart to trade based
solely on divergences since too many false signals are given. It’s not 100%
foolproof, but when used as a setup condition and combined with additional
confirmation tools, your trades have a high probability of winning with
relatively low risk.
There are a bunch of ways to take
advantage of those divergences.
One way is to look at trend lines
or candlestick formations to confirm whether a reversal or continuation is in
order.
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