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in opposition to the direction indicated by the supporting data series at non‐

confirmation. See Figure 9.36.

In Figure 9.37, we identify a reverse bearish divergent setup between

points A and B on UNG (United States Natural Gas Fund, NYSE). The cur-

rent larger trend is expected to continue to the downside, in an already declin-

ing market. The setup is confirmed once price penetrates the prior support at

point 1. Traders will normally initiate short positions around the breakout

with stoplosses located just above the highest point at B, trailing price all the

way down until the stop is taken out. Shorts may also be entered at the retest

of the prior support, now turned resistance. In this example, we see three

Figure 9.36 Reverse Bearish Divergence.

Figure 9.37 Reverse Bearish Divergence on UNG.
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