2-dimensionalt billede, der virker 3-dimensionalt, optages vha. The divergence is usually defined as a discrepancy in zigzag pointer forex indicator indicator readings and the price movement. In this article, we will first deal with the basic terms: divergence and convergence.
Then we will dwell on other methods of their classification, perform their comparative analysis as well as identify the advantages and disadvantages. So, divergence is a discrepancy in the indicator readings and the price movement. We also have the second term — convergence — having the opposite meaning. According to this logic, if divergence is a discrepancy in the indicator readings and the price movement, then convergence means conformity.
However, this is not the case since conformity cannot be equated to convergence. In order for both terms — divergence and convergence — to have a more precise meaning, they need more narrow definitions. Let’s look at the price and indicator charts. If the price moves up, while the indicator goes down, we have a divergence. Discrepancy in the price and the indicator movements. We are used to the fact that the indicator is usually placed below the price chart, so this definition seems acceptable at first glance. Now have a look at Figures 1 and 2 from the point of view of choosing the direction of trade.
Suppose that the price moves up, while the indicator moves down, so we have decided to sell. Left: conditions for selling, the price and the indicator diverge. It turns out that in case of selling, the price and the indicator diverge, while in case of buying, they converge, although buy and sell conditions are identical albeit opposite. This means, we can call one of the conditions bearish, while the second one is bullish. This means the location of the indicator below the price chart is not enough to define convergence and divergence. All provided definitions have to do with selling direction, while the case is opposite for buying. But there is a simpler and more precise version of the definition based on the very essence of technical analysis.