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11_Divergent High

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Understanding divergence is crucial for identifying trend reversals.


1. Divergence Explained:

  • Definition: Divergent high occurs when an asset's price hits a new high without confirmation from indicators like the OTS Green Line. Divergent low occurs when the price hits a new low without indicator support.

  • Significance: Indicates weakening momentum and potential trend reversal.

2. The Role of the OTS Green Line:

  • Indicator Support: Reliable tool for recognizing divergence.

  • Detection: When the Green Line doesn't mirror price movements, it signals potential reversals, prompting action.

3. Strategic Responses:

  • Fade the Trend: Capitalize on reversals by taking positions opposite to the trend.

  • Exit Positions: Exit positions aligned with the prior trend to lock in profits and minimize risks.

4. Maximizing Profit:

  • Profit Optimization: Refine entry and exit points based on divergence signals to maximize profit potential.

5. Integration with Trading Strategy:

  • Comprehensive Strategy Enhancement: Enhance decision-making by integrating divergence analysis into broader trading strategies, considering trend strength and momentum.


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