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The price action at the point of non‐confi rmation is referred to as the current
larger trend, the direction of which may be determined using adjacent peak
to peak or trough to trough analysis, slope analysis, or conventional trend
analysis.action leading up to the technical or divergent setup as the prior larger trend, that
is, the prior trend of one higher wave degree to the waves that formed the peaks
or troughs. The unfolding price action, post setup, is referred to as the subsequent
larger trend.
The current larger trend may either be a continuation or reversal of the prior
trend. Similarly, the subsequent larger trend may be a continuation or reversal of
the current or prior larger trend. See Figure 9.9.
We refer to the prior and subsequent trend of progressively higher or lower
peaks and troughs as the larger trend, or trend at the next higher wave degree.
The establishment of divergence is normally based on the sequence of peaks and
troughs at one higher wave degree than the oscillations that created it at the point
of non‐confi rmation. Hence, when comparing the peaks and troughs between
the main and supporting data series, both divergence and convergence must be
observed at the appropriate or corresponding wave degree in order to remain
analytically consistent. The term corresponding refers to price action at the same
wave degree. It is impossible to determine and interpret confi rmation and non‐
confi rmation correctly without the ability to recognize and distinguish between
wave degrees.
9.2.3 Wave Degrees in Divergence analysis
In Figure 9.10 , we see price moving up and down, that is, oscillating at a lower
wave degree. This upward succession of higher peaks and troughs forms a trend
at the next higher wave degree, called the larger trend.
Figure 9.9 Trend Referencing Pre and Post Technical Setup/Signal.