Using Bullish and Bearish Divergence to Anticipate Market Reversals
In this episode, Brian discusses divergences in technical analysis and how they can be used to make more informed trading decisions. He explains that divergences occur when the price of an asset moves in the opposite direction of a technical indicator, signaling a potential reversal in the trend. He focuses on two types of divergences; a bullish divergence and bearish divergence. Bullish divergence occurs when the price makes lower lows, but the indicator makes higher lows., indicating a potential reversal to the upside. Bearish divergence occurs when the price makes higher highs, but the indicator is making lower lows, indicating a potential reversal to the downside. Brian also emphasizes the importance of waiting for confirmation before entering a trade and combining divergences with other technical analysis tools. Key Takeaways: Divergences work best in trending markets Practice and experience are the key to effectively spotting divergences in the charts. Waiting for confirmation is a great way to avoid getting stopped out with a false signal and breakout. We hope you enjoy this episode!If you have a swing trading question or topic you want covered, email Brian at brian.montes@icloud.com. Interested in joining a community to help your swing trading journey? Check out the Disciplined Traders Community -> https://bit.ly/3Mm41N9