Learn about divergence, to predict price reversals. Divergence is a term used in technical analysis to describe a situation where the price of an asset and an oscillator indicator move in opposite directions. Oscillators are technical indicators that fluctuate within a certain range and provide signals of overbought and oversold conditions. Some popular oscillators used by traders are the Relative Strength Index (RSI), the Moving Average Convergence Divergence (MACD), and the Stochastic Oscillator. Learn positive divergence and negative divergence and close your positions, whenever you find divergences.
The author Sankar Srinivasan is Certified Market Professional of National Stock Exchange of India. And, he has more than 15 years of experience in online trading.