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Home » Forex Glossary » price divergence

price divergence

A situation in which indications of a trend will diverge from the price action. When traders in the market recognize a price divergence, they often change their position against the price action. Usually price divergence occurs when the strength of a trend weakens and volatility arises. Also even though a price action might seem to follow the same movement, there are technical indicators that will diverge from price action. Although these technical indicators are recognizing this trend's weakening position, traders at this time hope to take advantage of a reversal. They may do so by terminating current positions on securities or search for new opportunities to enter.