Notes
- There are two types of divergences:
- Type 1 - Classic divergence.
- Type 2 - Hidden divergence.
- Hidden divergences are used for trend following.
- Classic divergence setups:
- Bullish divergence - The price will form a lower low, but the momentum indicator will create a higher low.
- Bearish divergence - The price will form a higher high, but the momentum indicator will create a lower high.
- Hidden divergence setups:
- Bullish divergence - The price will form a higher low, but the momentum indicator will create a lower low.
- Bearish divergence - The price will form a lower high, but the momentum indicator will create a higher high.
- Smart money does not look at what technical indicators are doing. They look at where the stops are.
Divergence Phantoms - USDCAD Example
Divergence Phantoms - USDCHF Example
Next lesson: ICT Mentorship Core Content - Month 4 - Double Bottom & Double Top
Previous lesson: ICT Mentorship Core Content - Month 4 - Fair Value Gap