Divergence is an important leading signal.
A divergence signal develops when price leads or lags the indicator.
There are 2 types of divergences. Regular and Hidden.
Regular divergence is an important trend reversal signal.
Sometime it can be a retracement instead of a trend reversal.
However hidden divergence is more important than regular divergence.
Hidden divergence is always a trend continuation signal with a higher accuracy as compared to regular divergence.
Read this blog post in which I have posted a video tutorial on how to trade with hidden divergences.
You look for hidden divergence at the end of a retracement.
Hidden divergence tells you that the trend is going to continue in the original direction now.
