Divergence Types – Spot Trend Reversals and Continuations Like a Pro

Divergence is a powerful concept that helps traders anticipate price movement using momentum indicators like RSI or MACD.

Here are the 3 key divergence types every trader should know:

1. Regular Divergence (Trend Reversal)

Price forms lower lows, but the indicator shows higher lows (bullish)

Or, price makes higher highs while the indicator makes lower highs (bearish)

This signals a potential trend reversal.

2. Hidden Divergence (Trend Continuation)

Price makes higher lows, while the indicator makes lower lows (bullish)

Or price makes lower highs, but the indicator makes higher highs (bearish)

Suggests the current trend will likely continue.

3.Extended Divergence (Also Continuation)

Price forms a double bottom or top, while the indicator continues to trend

Often seen as a momentum-based continuation signal.

Using divergence with proper risk management and confluence (support zones, patterns) makes it a high-probability edge in trading.

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