Divergence

hi all,

I have been researching divergence and I have come across the terms “classical” and “reverse” diverregence and I can’t seem to find out what they actually mean…?

Does any one know?

I have never heard them called that but I am going to assume a little bit here I dont have charts to show right now but try to follow me.

Let say for the sake of this that we are in an uptrend

Reversal Divergence= When price makes an higher high but the indicator fails to make a higher high. This generally is signaling the uptrend is running out of steam and about to reverse.

classical Divergence= When price makes a higher low but the indicator makes a lower low this is generally signaling the up trend is not done and is ready to push higher. This is also know in the school as hidden divergence and is generally trend following by nature.

so if it’s classical divergence it probably means that there is a small blip/re-tracement but the trend is likely to carry on whereas reversal divergence means it’s a reversal?

Thank you for your help

I did have a chart of what I assume is a classical divergence. This is a trade I took a couple weeks ago. Note we are starting a down trend with the lower highs you can see when price made a small pull back to make a lower high look at the stcoch is making a higher high into over bought territory. Classical trend following divergence and this trade did in fact go through the trend line on there and pay off fairly nicely.

Now I would not trade divergence alone but when lined up with other confluences it can be a powerful tool to have

thank you for your help

Yes, for what my opnion is worth, I would not trade divergences alone, I guess it’s useful to have as a confirmation when price action looks as if it is reversing (past the usual fib levels and candlestick changes).

thank you for your support bobmaninc.

No problem and dont be afraid to ask as many questions as many time as you want. See when you do google stuff about forex you tend to pull up threads from other forums and I dont know about the rest here I enjoy seeing babypips at the top of that list. Well there is only 1 way we get there and thats by newbs asking questions and newbs like me taking the time to answer them.

Try this video, tells you about divergence -

these are just fancy terms for the same thing

classic = regular divergence
reverse = hidden divergence

don’t let them confuse you and deter you from your learning journey :wink: