For you to understand divergence in great detail you may want to look in the fundamentals of the indicators you are using, such as the RSI or MACD. You can then ask yourself the question "why is the RSI showing a Higher Low, while price is making a Lower Low"...it is actually very difficult to explain in pure mathematics and would require a lot of workings and examples to prove this.
So for now, just learn that if price making lower lows and the indicator is making higher lows, then price could turn to the upside. The opposite is also true for price moving to the downside.
You really need to just 'assume' this and take it as a given rule.
It's like when you learn to drive a car, you are told that the brake pedal will slow the car down, but you are not told every detail on how the breaks operates, what the mechanics are and why it works in the way it does.
Last edited by Jezzode; 06-17-2012 at 01:28 PM.
You learn more looking for the answer to a question than you do being told the answer straight away.