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Divergence Analysis

Figure  9.109 Forecasting Reversals in GBPUSD via Intra‐Oscillator (Directional)

Divergence.

Source: MetaTrader 4

Figure  9.110 Forecasting Reversals in GBPUSD via Intra‐Oscillator (Phase)

Divergence.

Source: MetaTrader 4

S&P500 Bullish Percent Index and the MACD. We observe that every time the

Bullish Percent Index tests its overbought level, as seen at time lines 1 to 4, the

market eventually reverses. We see two non‐correlated indicators providing al-

most identical signals. We also see that the market reacts in a consistent manner

to the bullish and bearish divergences by following through with either an upside

or downside move initiated at or soon after price confirmation.