Following the analogy, we should sell when the price moves down, while the indicator moves up (Fig. Suppose that the price moves up, while the indicator moves down, so we have decided to sell. Now have a look at Figures 1 and 2 from the point of view of choosing the direction of trade. On the right, the price moves down, while the indicator moves up - divergence While the indicator moves down - convergence. Discrepancy in the price and the indicator movements. However, if we reverse the positions of the indicator and the price chart, everything changes radically: divergence turns into convergence and vice versa (Fig. We are used to the fact that the indicator is usually placed below the price chart, so this definition seems acceptable at first glance. On the right, the price moves down, while the indicator moves up - convergence While the indicator moves down - divergence. If the price moves down, while the indicator goes up, we have a convergence (Fig. If the price moves up, while the indicator goes down, we have a divergence. Let's look at the price and indicator charts. In order for both terms - divergence and convergence - to have a more precise meaning, they need more narrow definitions. However, this is not the case since conformity cannot be equated to convergence. According to this logic, if divergence is a discrepancy in the indicator readings and the price movement, then convergence means conformity. We also have the second term - convergence - having the opposite meaning. So, divergence is a discrepancy in the indicator readings and the price movement. Divergence and convergence (concept definition) Finally, we will develop our own classification which is more complete and has no evident drawbacks, as well as a universal indicator for searching and displaying convergences/divergences on the chart. Then we will dwell on other methods of their classification, perform their comparative analysis as well as identify the advantages and disadvantages. In this article, we will first deal with the basic terms: divergence and convergence. There are broader divergence/convergence classification systems, including such definitions as "hidden divergence", "extended divergence", divergences of A, B and C classes etc. The antonymous term is "convergence" coming from the Latin word "convergo" ("I bring together"). The divergence is usually defined as a discrepancy in the indicator readings and the price movement. The term "divergence" comes from the Latin word "divergere" ("to detect discrepancy"). Preparing for checking the divergence conditions.Classes for checking divergence conditions.Defining extreme values by their position relative to the oscillator's midpoint.Defining extreme values by a threshold value.Universal indicator for defining divergence.Complete systematization of the price and indicator movement.Maximum/minimum value above/below the indicator center line.Defining tops/bottoms by a threshold value.Methods for determining the price and indicator movement direction.Divergence and convergence (concept definition).
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