Divergence in Trading

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What is Divergence? Divergence is when the asset price moves in the direction opposite to what a technical indicator indicates. When a stock is diverging, it signals weaker price trends and the beginning of a reversal

Seeing divergence increases profitability by alerting a trader to protect profits. Technical traders generally use divergence when the price moves in the opposite direction of a technical indicator.

Strong divergence is the most reliable type of divergence, often signaling a significant reversal. It occurs when the price makes a new high or low, but the indicator fails to do so, indicating weakening momentum.