Trading strategy with divergence for stock market Back

The other means of using indicators is to look at divergences between price peaks/troughs and indicator peaks/troughs.

There are two types of divergence.

1. Bullish Divergence: In Bullish divergence if the price is making lower low but the indicator does not make a corresponding lower low, then it can be surmised that the downward movement is running out of strength and a reversal upward could soon be expected.

2. Bearish Divergence: Similarly in bearish divergence if the price makes higher high but the indicator does not make a corresponding higher high this indicates there is less power driving the new price high. Since there is less power or support for the new higher price a reversal could be expected.

You can sell Nifty after the breakout of suppotive line because Negative Divergence form in Nifty daily chart, check on attached image.

For detail about Divergence and other things join NIFM for Techncial Analysis Course.