Divergence in the Shadows

Let's talk about hidden divergences now that we've covered conventional divergences in the last lecture.

What is a concealed divergence？

Divergences can be used to indicate a probable trend reversal as well as a possible continuance of the trend (price continues to move in its current direction).

Always remember that the trend is your buddy, so if you get a signal that the trend is going to continue, take advantage of it!

When the price makes a higher low (HL) but the oscillator shows a lower low (LL), this is known as Hidden bullish divergence.

Hidden Bullish Divergence

When the pair is in a UPTREND, this can be seen.

Look to check if the oscillator follows the price to a higher low (HL).

If it doesn't, and instead makes a lower low (LL), we're dealing with some concealed divergence.

Hidden Bearish Divergence

Finally, there's a bearish divergence that's been disguised.

When the price produces a lower high (LH), but the oscillator makes a higher high, this happens (HH).

You've undoubtedly figured out that this happens during a DOWNTREND.

When you find concealed bearish divergence, you can bet that the pair will continue to fall and the downturn will continue.

Let's review what you've learned about concealed divergence thus far.

If you're a trend watcher, set aside some time to search for concealed divergence.

If you happen to notice it, it can help you get a head start on the trend.

Isn't that appealing？

Keep in mind that regular divergences can indicate a trend reversal, whereas hidden divergences indicate that the trend is continuing.

• Divergences that occur on a regular basis indicate the possibility of a trend reversal.

• Hidden divergences indicate the possibility of a trend continuance.

We'll show you some real-world examples of when divergences occurred and how you could have traded them in the upcoming class.