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Tuesday , October , 17 2017

Price Action Divergence Indicator - Divergence is one of most complicated for most rookie traders. A divergence happens when an indicator and the price of the underlying security is heading in opposite directions. Negative divergence happens when the price of a security is in an uptrend and the divergence indicator heads downward. Contrariwise, positive divergence occurs when the price of the underlying security is in a downtrend but an indicator starts to rise. These are usually reliable signs that the price of an asset may be reversing. When using divergence to help make trading decisions, be aware that divergence can occur over extended periods of time, so other technical analysis tools should be used such as trend lines, along with support and resistance levels to help confirm the reversal.