Divergence Decisions .pdf - Content
The subject of divergence is one that we will approach with the utmost caution. We hope we have made ourselves clear in the other volumes of this course that we have little regard for oscillators and indicators when such “tools” are used indiscriminately, or used as a mechanical way to trade. However, when used intelligently, with full understanding of what and how they are constructed, and with knowledge as to when they will be accurate and when they will be misleading, we are not against the use of such tools.
Divergence is a topic that has been hotly debated over the years. An indicator can be divergent from prices for much longer than proponents of its use may care to admit. Yet if used intelligently, divergence can be a useful tool. Our advice is to learn to use it at appropriate times, and perhaps with a few other measurements that will tend to confirm its validity.