Divergence is an indication of a market reversal. However, traders always trapped into a lost trade if the market is entered with a wrong knowledge of the divergence setup.
Here is my setup identifying a valid divergence, and identifying a false breakout after a divergence.
In this strategy, I will use these indicators: 1. EMA 14: To confirm market direction (Buy or sell) 2. Commodity channel index (default setting): To identify market divergence 3. MACD: to confirm market buy/sell and validity of a divergence setup 4. Price action 5. Trendlines
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