- Trading on a Trend Reversal – Divergence
Divergence is a discrepancy between the price chart and the indicator.
If a divergence appears between the chart and the Awesome Oscillator, a trend reversal is possible.
If the oscillator moves downward and the chart moves upward, the asset price may reverse and start to fall.
This divergence is called bearish.
If the oscillator moves upward and the chart moves downward, the asset price may reverse and start to rise.
This divergence is called bullish.
Please note: divergence is a secondary signal. It cannot identify the exact entry point.
I don’t recommend opening trades on the basis of it alone.