Just a thorough read and a little practice can make traders use divergence to make predictions in the market. Understanding divergences is not very complicated. Thus, this is expected to be a perfect time for traders to enter or re-enter the market. In this case, the trader can expect a bullish or upward trend. Hidden Bullish Divergence: when the market price of the security is at a higher low, but the oscillator reflects a lower low the trend is bull bias.In such cases, the traders take selling positions. , the bearish or downward trend is expected to continue. Hidden Bearish Divergence: when the price shows a lower high, but the indicator reflects a higher high, the trader can expect the situation to be bear bias.The bias of hidden divergence means in which direction the trend is likely to continue.įollowing are the two types of hidden divergence bias and what they indicate. Unlike the Regular Divergence, the Hidden Divergence indicates that the current trend may continue. Therefore, a possible problem of a trend reversal from bullish to bearish. This situation is bearish bias as it indicates that the bullish trend is no longer powerful, and the bearish trend may take over. Regular Bearish Divergence: Another case is when the market shows the price at a higher high, but the oscillator or indicator shows a lower high.Hence, the possibility of a trend reversal from bearish to bullish. This situation indicates that the bearish trend is losing its strength, and a possible bullish trend is taking a powerful position.
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