Convergence Divergence Trading

Divergence and Convergence on a financial market occur when buy or sell orders are reaching a saturated amount.

On an upward trend, if tendency to place further buy orders decreases considerably and numerous traders close their Buy orders in spite of more upward movement then a Divergence in the market is formed and can be detected by some powerful indicators.

Convergence happens when the tendency for more Sell orders decrease substantially and huge amount of Sell orders are closed on a downtrend even if market price continues its downward direction.

Divergence and Convergence can be recognized by applying diverse indicators to distinguish the best reversal prices to place lucrative orders.

Divergence/Convergence Strategy

Reliable and Strong trading signals can be generated by applying Convergence and Divergence alongside of other confirmations.

Type I

Convergence/Divergence with EMA & SMA: While EMA and SMA shows a good region to place and order, if a divergence or convergence appears then credible trading signal will be generated.

Type II

Overlapped Convergences/Divergences: Two successive divergences or convergences concurrent with powerful reversal candlestick pattern will show us a credible trading signal.

Divergence Trading

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