Divergence/ Regular And Hidden

Question 1

Although divergence is not an indicator in that it is not a mathematical construct, it is often said to be a _____________ indicator.

Answer 1

Leading

Question 2

Divergence refers to the difference in movement between an oscillating indicator, such as MACD, CCI, RSI, Stochastic, etc., and the ___________________ of the underlying financial instrument.

Answer 2

price action

Question 3

Modern chart technicians talk of two types of divergence: ____________ divergence and ____________ divergence

Answer 3

Regular and Hidden

Question 4

Regular divergence is the classic sense of divergence that occurs when the price action makes _____________ or _______________ while the oscillating indicator does not

Answer 4

higher highs or lower lows

Question 5

Regular divergence indicates a weakness in the price action and an early warning that _________________________.

Answer 5

the trend could be coming to an end

Question 6

regular divergence indicates that ___________________________ could occur though it does not indicated when this will occur.

Answer 6

a probable trend reversal

Question 7

Regular divergence can be either ___________________ or ________________

Answer 7

positive (bullish) or negative (bearish).

Question 8

______________ Divergence is bullish and occurs in a down trend when the price action prints lower lows that are not confirmed by the oscillating indicator.

Answer 8

Positive

Question 9

Positive divergence indicates a ________________________ as selling is less urgent or buyers are emerging. When the oscillator __________ to confirm the lower lows on the price action, it can either makes higher lows, which is more significant, or it can make double or triple bottoms.

Answer 9

weakness in the down trend fails

Question 10

Double or triple bottoms occur more often on oscillators, such as ____________________ that are range bound and less often on oscillators such as ____________________ that are not range bound.

Answer 10

RSI and Stochastics MACD and CCI

Question 11

Negative Divergence (bearish divergence) occurs in an uptrend when the price action makes __________________ that are not confirmed by the oscillating indicator

Answer 11

higher highs

Question 12

Negative divergence indicates a weakness in the uptrend as buying is ____________ and ________________ is increasing

Answer 12

less intense and selling or profit taking

Question 13

Hidden divergence occurs when the oscillator _____________________ while the price action does not

Answer 13

makes a higher high or lower low

Question 14

Hidden divergence tends to occur during consolidation or corrections within an existing trend and usually indicates that __________________________________________.

Answer 14

there is still strength in the prevailing trend and that the trend will resume

Question 15

hidden divergence is akin to a ________________ pattern. As with regular divergence, hidden divergence can be bullish or bearish

Answer 15

continuation

Question 16

___________________ Divergence occurs during a correction in an uptrend when the oscillator makes a higher high while the price action does not as it is in a correction or consolidation phase.

Answer 16

Bullish Hidden

Question 17

Bullish hidden divergence indicates that there is _______________________ and ________________________rather than the emergence of strong selling and is thus unlikely to be last long. Thus, the uptrend can be expect to resume.

Answer 17

still strength in the uptrend and that the correction is merely profit taking

Question 18

____________________ Divergence occurs during a reaction in a down trend when the oscillator makes a lower low while the price action _____________ as it is in a reaction or consolidation phase

Answer 18

Bearish Hidden does not

Question 19

Hidden bearish divergence indicates that ________________ and ___________________. The reaction is merely profit taking rather than the emergence of strong buyers and is thus likely to be short lived. As a result, the down trend is more likely to resume in due time.

Answer 19

the selling has not waned and that that down trend is still strong

Question 20

Neither regular nor hidden divergence gives clear entry signals. Instead they respectively give an indication of the of the _______________ or __________________ of the underlying trend

Answer 20

weakness or strength

Question 21

divergence provides the probable direction of subsequent price action but does not provide ____________________. Therefore divergence can be used more effectively in conjunction with other trading techniques, such as trend lines, candlestick patterns, and moving average crossovers as a __________________ of the signals provided by those techniques, or vice versa

Answer 21

the entry confirmation

Question 22

negative (bearish) divergence is quite significant when it occurs near or at ____________________ or ______________________.

Answer 22

a resistance trendline Or when combined with a bearish reversal pattern (hanging man, bear engulfing, dark cloud cover, dojo, or star) occurs in an uptrend

Question 23

positive (bullish) divergence becomes quite significant when it occurs near or at ______________________ or __________________________.

Answer 23

a support trendline, or when a bullish reversal pattern (hammer, bull engulfing, piercing, doji, star) occurs in a down trend.