Divergence

Definition - What does Divergence mean?

Divergence refers to a situation where the price action of a currency pair separates from an indicator it was previously correlated with. Divergence usually points to a weakening in the trend and a possible reversal.

ForexDictionary explains Divergence

Traders use leading indicators to watch for signs of divergence in a currency pair’s trend. If the correlation breaks down – that is, if price action and the indicator diverge – then the trader takes it as a signal to buy in or sell, depending on the trading strategy.

Posted by:

Connect with us

ForexDictionary on Linkedin
ForexDictionary on Linkedin
Tweat cdn.forexdictionary.com
ForexDictionary on Twitter


'@ForexDictionary'
Sign up for ForexDictionary's Free Newsletter!