thE hAnDbook of tEchnicAL AnALySiSThe relationship between wave degrees is relative. Referring again to
Figure 9.11 , if the alphabetical oscillations (A, B, C,... , a, b, c, etc.) represent
the lower wave degree, then oscillations I to XII would represent the next higher
wave degree and we call it the current larger trend. However, if oscillations I to
XII represent the lower wave degree, then oscillations 1 to 3 would represent the
next higher wave degree and we now call this the current larger trend.
nOte
The current larger trend is always one wave degree higher than the oscillations
that created it.9.2.4 reversal and Continuation in terms of Wave Degrees
Before we delve further into the topic of divergence per se, let us fi rst refer to a
couple of examples to better understand the meaning of reversal and continua-
tion with respect to wave degrees in a trend. This is a critical step in understand-
ing how standard and reverse divergence is subsequently defi ned. In Figure 9.12 ,
we see higher peaks in price accompanied by lower peaks in the supporting data
series giving rise to non‐confi rmation based on adjacent peak to peak analy-
sis. Price subsequently makes successive lower peaks and troughs. We say that
there is a reversal of the current larger trend, or trend at the next higher wave
degree. As will be explained later, standard divergence indicates a potential re-
versal in the current larger trend. The case for reverse divergence is a little more
complicated.
Referring to Figure 9.13 , we observe an upside reversal of the current larger
trend, with higher peaks and troughs in the EURUSD.
Figure 9.12 Reversal of the Current Larger Trend.