The method of trading with the help of divergence MACD. Of course, just take “naked” divergence not worth it, but in conjunction with its trading rules, it turns out a very strong and profitable system. An example of such a bundle is price action model 1-2-3 And MACD Histogram divergence.
But first, let's talk about, what is divergence and its different versions.
Divergence formed then, when the price reaches a new high, and the corresponding maximum on the oscillator is not higher than the previous one, or when the price hits a new low, and the corresponding minimum on the oscillator is not lower than the previous one.
1. Complete divergence at the top of the market
PRICE has formed a new local maximum, which the above previous.
The INDICATOR has formed a new local maximum, which the below previous.
Example of divergence №1
2. Sideways divergence at the top of the market 1
PRICE has formed a new local maximum, which the above previous.
INDICATOR has formed a new local maximum, which height Is the previous.
Example of divergence №2
3. Sideways divergence at the top of the market 2
PRICE has formed a new local maximum, which height Is the previous.
INDICATOR has formed a new local maximum, which height below previous.
Example of divergence №3
4. Complete divergence at the market low
PRICE has formed a new local minimum, which the below previous.
INDICATOR has formed a new local minimum, which the above previous.
Example of divergence №4
5. Lateral divergence at the market low 1
PRICE has formed a new local minimum, which the below previous.
INDICATOR has formed a new local minimum, which the Is the previous.
Example of divergence №5
6. Lateral divergence at the market low 2
PRICE has formed a new local minimum, which the Is the previous.
INDICATOR has formed a new local minimum, which the above previous.
Example of divergence №6
It is also worth paying attention to double divergence, but this is already in the next article.
